ANNUAL REPORT VERENIGING BUMA 2018...(CvTA); • deciding to make the recommendation to the General Members’ Meeting to appoint the Chief Executive as the Chairman of the Board (for

ANNUAL REPORTVERENIGING BUMA 2018

BUMA 1

TABLE OF CONTENTS

KEY FIGURES 3

1. BOARD REPORT 7

1.1 EXPLANATION BY THE BOARD 7

1.2 FINANCIAL RESULTS, MARKET DEVELOPMENTS 8

AND OUTLOOK

1.3 VOI@E QUALITY MARK DISTRIBUTION AUDIT 20

1.4 PROVISIONS OF THE ARTICLES OF ASSOCIATION 21

REGARDING THE SUPERVISORY BOARD AND THE BOARD

1.5 TRANSPARENCY REPORT 22

2. SUPERVISORY BOARD REPORT 24

2.1 REPORT OF THE SUPERVISORY BOARD OF BUMA 25

2.2 OTHER POSITIONS OF MEMBERS OF THE 28

SUPERVISORY BOARD, COUNCIL OF RIGHTS OWNERS

AND BOARD UNDER THE ARTICLES OF ASSOCIATION

3. APPROVAL ON THE CONSOLIDATED FINANCIAL STATEMENTS 32

4. CONSOLIDATED FINANCIAL STATEMENTS 34

5. OTHER INFORMATION 67

2 BUMA - ANNUAL REPORT 2018

KEY FIGURES OF BUMA

180,963 | 2018

172,411 | 2017

170,982 | 2016

COLLECTION BY BUMA (X EUR 1,000)

2018

2017

2016

NUMBER OF FTES

BUMA

122.8

141.3

146.8

OUTSOURCING

26.5

48.2

62.2

COPYRIGHT ROYALTIES TO BE DISTRIBUTED(x EUR 1,000)

192,011

189,371

186,707

2018

2017

2016

160,000 165,000 170,000 175,000 180,000 185,000 190,000 195,000 200,000

MANAGEMENT COSTS(x EUR 1,000)

26,028

26,533

25,080

2018

2017

2016

5,000 10,000 15,000 20,000 25,000 30,000

DISTRIBUTIONS(x EUR 1,000)

159,999

151,335

159,413

2018

2017

2016

120,000 125,000 130,000 135,000 140,000 145,000 150,000 155,000 160,000

BUMA 3

KEY FIGURES 2018 2017 2016 2015 2014 2013

(x EUR 1,000)

COPYRIGHT ROYALTIES RECEIVED/RECEIVABLE

Radio, TV and Network Providers 71,430 68,177 70,393 67,297 71,774 69,098

Live performances 34,065 30,698 29,799 27,146 24,130 23,380

Restaurants and bars 14,891 14,294 15,074 14,554 13,469 13,559

Work spaces 17,171 17,392 17,183 17,399 16,828 16,732

Shops and stores 13,234 13,509 13,179 13,436 12,317 12,494

Online 13,681 13,618 10,128 8,415 5,656 3,092

Music use in the Netherlands 164,471 157,688 155,756 148,247 144,174 138,355

Music use abroad 16,492 14,723 15,226 16,444 14,155 13,846

Total 180,963 172,411 170,982 164,691 158,329 152,201

DISTRIBUTIONS

Rights owners 87,262 84,348 91,332 80,086 75,779 77,503

CMOs Abroad 57,855 53,503 54,535 53,657 49,757 50,943

Addition to Fund for Social and Cultural Purposes 10,456 9,896 10,368 10,201 10,184 10,098

155,573 147,747 156,232 143,946 135,720 138,544

Administration fee withheld upon distribution 4,426 3,589 3,181 2,840 2,413 2,339

Total 159,999 151,335 159,413 146,786 138,133 140,883

COPYRIGHT ROYALTIES TO BE DISTRIBUTED

Copyright royalties to be distributed at end of financial year 192,011 189. 371 186,707 190,060 183,224 173,865

Fund for Social and Cultural Purposes

Disbursements in financial year 10,587 9,704 11,863 11,581 12,376 12,631

Funds available at end of financial year 4,766 4,897 2,572 4,067 5,447 7,639

OPERATING STATEMENT

Balance of administration fee to be withheld in the year of collection 18,323 18,411 14,917 11,069 10,837 8,326

Administration fee withheld upon distribution 4,426 3,589 3,181 2,840 2,413 2,339

Other income 885 868 842 791 791 862

Total income 23,634 22,868 18,940 14,700 14,041 11,527

Management costs -26,028 -26,533 -25,080 -21,237 -20,878 -20,989

Total expenses -26,028 -26,533 -25,080 -21,237 -20,878 -20,989

BALANCE OF TOTAL INCOME AND EXPENSES -2,394 -3,665 -6,140 -6,537 -6,837 -9,462

Financial income and expenses -7,793 10,523 8,371 1,169 11,521 10,827

Available for appropriated reserve -10,187 6,858 2,231 -5,368 4,684 1,365


Members and affiliates in 2018

Composers/songwriters 27,393

Publishers 1,457

Legal heirs 911

TOTAL 29,761

Publishers

Legal heirs

Composers/songwriters92%

5%3%

LIVE PERFORMANCES

More than 90,000 live performances were licensed.

SHOPS AND STORES, RESTAURANTS AND BARS AND WORK SPACES155,000 locations were licensed.

ONLINEIn total, more than 1,100 websites and apps were licensed.

Distributions were made for 26.6 million downloads.

Distributions were made for 16.9 billion streams.

RTV In total, 247 licences were concluded.

Distributions were made for 1.4 billion seconds.

KEY FIGURES 2018 2017 2016 2015 2014 2013

Actual cost percentage withheld for Online 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%

Actual cost percentage withheld for Abroad 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Actual cost percentage withheld for Foreign Network Providers 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Actual cost percentage withheld for Other categories. 12.2% 12.8% 10.2% 7.9% 7.8% 6.2%

Average actual percentage withheld (administration fees as a percentage of collection) 12.6% 12.8% 10.6% 8.4% 8.4% 7.0%

Management costs (gross) as a percentage of total royalties received/receivable 14.4% 15.4% 14.7% 12.9% 13.2% 13.8%

Management costs (gross) as a percentage of total copyright royalties distributed (including administration fees withheld) 14.6% 16.0% 14.7% 13.5% 14.3% 14.0%

Annual change in operating costs -1.9% 5.8% 18.1% 1.7% -0.5% 4.5%

Derived consumer price index 1.7% 1.4% 0.3% 0.6% 1.0% 2.5%

Number of members and participants 29,761 28,386 26,531 25,151 23,951 22,850

Number of invoiced licensees 108,495 109,200 107,500 103,000 106,000 114,000

Number of employees in FTEs* 122.8 141,3 146.8 151.0 160.3 163.2

* The employees also work on behalf of Stemra.

BUMA 5

1. BOARD REPORT


1.1 EXPLANATION BY THE BOARD

INTRODUCTION Buma achieved good financial results in 2018, both in the area of

collection and in the distribution of copyright royalties. With the

exception of a few one-off items, the management costs were kept

well under control. Collection levels increased in nearly all market

segments.

However, the financial results presented in this annual report

include a false note, as our investments turned a loss in 2018. This

was due to the developments in the global stock markets.

This Board report discusses in more detail the achieved financial

results, important events and market developments, and the

mission we are committed to as Buma.

FINANCIAL RESULTS Income came to EUR 181.0 million in 2018, up by 5% compared to

the year before (2017: EUR 172.4 million) and increasing for the fifth

year in a row. The growth of income in 2018 was mainly

attributable to the market segments Radio & TV (RTV), Live

performances, Online and Abroad. Income from the General

licences (Restaurants and bars, Work spaces and Shops and stores)

segment remained stable compared to previous years.

The distributions made by Buma increased by 3% in 2018 compared

to 2017. In 2018, a total amount of EUR 155.6 million was

distributed, compared to EUR 151.3 million in 2017. The

distributions reached the highest level in the past 5 years in 2018.

The management costs decreased to 26.0 million, a 1.9% reduction

compared to 2017, when the management costs amounted to EUR

26.5 million.

As such, the costs remained below the norm of 15% set by the

Dutch government under the Collective Management

Organisations for Copyright and Neighbouring Rights (Supervision

and Dispute Resolution) Act (‘Supervision Act’). The management

costs for 2018 as a percentage of the collection came to 14.4%.The

management costs for 2018 as a percentage of the distribution

came to 14.6%. The development of the costs (which fell by 1.9%)

remained within the set norm, which is based on the consumer

price index (which rose by 1.7%).

A detailed analysis of how the financial results were achieved can

be found in section 1.2 of this report. This section also discusses in

more detail the investment results achieved in the past year.

GOVERNANCE MODEL UP TO 22 JUNE 2018 Up to 22 June 2018, Buma’s governance model consisted of a Board

and Management. According to this model, the managerial

responsibility under the Articles of Association rested with the

Board, which consisted of 12 representatives of members and

affiliates of Buma and Stemra and one independent Chairman of

the Board. Under this model, the Board supervised the

Management, focusing on the implementation of the policy.

The Management consisted of one director under the Articles of

Association and two titular directors. The aforementioned Board

met six times (up to 22 June 2018). The Audit Committee, whose

members were appointed from among the Board, met two times in

this period. In addition, there were two meetings of the Operational

Management Committee and one meeting of the Investment

Committee in 2018 up to 22 June.

In this period, the Board paid a lot of attention to the preparations

for the introduction of the new governance model. These

preparations included: approving the member profiles for the

Supervisory Board and the Council of Rights Owners, approving

amendments to the Articles of Association and rules for the new

governance bodies, setting up the appointment committee for the

selection of the nominated Chairman of the Supervisory Board and

setting up the appointment advisory committee for the selection

and recommendations for the appointment of the members of the

Supervisory Board and the Council of Rights Owners.

In addition, the activities of the Board in this period included:

• adopting the budget for 2018 (including the additions to Buma

Cultuur and Sociaal Fonds Buma);

• discussing the interim financial reports;

• deciding to engage Mazars Accountants for the audit of the

financial statements with effect from the financial year 2017;

• discussing the ruling of the Integrity Committee of 4 April 2018

and formulating a response to this ruling to the professional

associations and the Dutch Copyright Supervisory Board

(CvTA);

• deciding to make the recommendation to the General Members’

Meeting to appoint the Chief Executive as the Chairman of the

Board (for an indefinite period) under the new governance

model with effect from 22 June 2018; and

• focusing on the preparations for the General Members’ Meeting

to be held in October 2018.

NEW GOVERNANCE MODEL SINCE 22 JUNE 2018 The governance model has been updated to bring it in line with

the European Collective Rights Management Directive (Directive

2014/26 EU of 26 February 2014). The new governance model

became effective on 22 June 2018. This new governance model

comprises a two-member Board under the Articles of Association

according to the collegial model, a Supervisory Board and a Council

of Rights Owners.

This means that the managerial, supervisory and advisory roles

and responsibilities are now more clearly allocated than under the

previous hybrid model.

Buma is supervised by an external supervisory authority, the Dutch

Copyright Supervisory Board (CvTA). In the context of this external

supervision, the Board regularly consults with the CvTA on the

basis of the Supervision Agenda.

1. BOARD REPORT

BUMA 7

At the General Members’ Meeting on 29 October 2018, it was

decided to expand the Supervisory Board of Buma by adding a

ninth, independent member with a finance/IT profile. In addition,

two new members were appointed to the Supervisory Board:

Jolanda Messerschmidt and Ruud Hopstaken. Furthermore, this

meeting approved the interim appointment of Cees van Steijn as

acting CEO and Siebe van Elsloo as acting CFO. They are both Board

members under the Articles of Association and together form the

two-member Board. Their appointment as permanent Board

members has been put on the agenda for the next regular

Members’ Meeting.

The Members’ Meeting on 29 October marked the end of a turbulent

period. At this meeting, the Supervisory Board and the Management

explained the report of the Investigation Committee (the Smits/

Winter Committee) in detail and discussed it with the Members’

Meeting. The recommendations made by the Investigation

Committee to improve the supervision by increasing the number of

independent members of the Supervisory Board, expanding the

Audit Committee and appointing a second Board member under the

Articles of Association have been fully adopted and implemented.

The appointment of two new Board members under the Articles of

Association (for the period of one year) followed the decision made

by Wim van Limpt at the Members’ Meeting on 29 October to resign

his duties as Chairman and member of the Board.

In the second half of 2018, the Board had two meetings with the

Council of Rights Owners. From 2019, the Board will have around six

regular meetings per year with the Council of Rights Owners

(excluding the meetings of the Distribution Committee). In 2018, the

Board discussed various issues with the Council of Rights Owners,

including the distribution and the review agenda, the Budget for 2019

and the Action Plan of the Board. In addition, the Board informed the

Council of Rights Owners about developments in the area of RTV

and Online.

The events at Buma in 2017 and 2018 placed great demands on our

members, employees, Works Council, Board and Supervisory Board,

as well as our other stakeholders. Thanks to the efforts of all parties

involved, we have laid the basis for the energetic implementation of

the transition to a transparent and accessible organisation. This will

be done partly on the basis of the Action Plan drawn up by the Board,

which has been coordinated with the Supervisory Board, the Council

of Rights Owners and the Works Council. The Board is convinced that

the intense exchange of views has helped us to turn the page on what

has been a turbulent period for many people.

ADDED VALUE The world around us has been changing for some time.

Internationalisation and technology are two key drivers of this

change. To remain effective and efficient in the future, Buma will

keep focusing on working closely together with our foreign sister

societies and relevant technology partners. Our challenge

continues to be to tailor our operations to the needs of the

members of Buma. Operating effectively and continuously proving

our added value are crucial. We aim to do this in an environment

characterised by maximum transparency, both within our

organisation and in our external communications.

The mission of Buma is, and will continue to be, to protect the

interests of our members and to ensure that they receive a fair

remuneration for the use of their works. By acting as a strong

collective of rights owners, with a clear focus on added value,

Buma can continue to work on protecting their work and ensuring

a fair remuneration for the use of copyright, even though there is

some pressure on the willingness to pay among some of the

licensees of this music copyright.

Major platforms, known as Digital Service Providers, are currently

expanding their business models. These large platforms are

omnipresent and are a permanent disruptive factor. A world without

these platforms has become unimaginable, even to members of Buma.

Achieving our mission of protecting the interests of our members as

best as possible and ensuring a fair remuneration for the use of their

work requires that Buma keeps innovating to respond to these

developments. This calls for specialised financial and legal expertise.

MARKET DEVELOPMENTS Competition is increasing, which is a positive development.

Competition contributes to a culture of continuous improvement,

which includes improving our proposition to members and affiliates

in the areas of service and efficiency. It is a given that we now operate

in a broad playing field with multiple market partners. Particularly in

the online market, where borders are increasingly fading, we are

seeing increasing competition. In the context of flexible management,

rights owners are able to join collective management organisations

(CMOs) of their choice for certain usage categories and countries.

In certain market segments, we are seeing market parties that are

effectively direct competitors in an area that is one of Buma’s core

tasks: administering repertoire. These initiatives, which involve

offering rights including the related repertoire (i.e. repertoire that is

not managed by Buma), fill a need in the market. As a result, new

licensing models will emerge within Buma for the use of music in

certain market segments.

In recent years, we have seen a general trend of (online) repertoire

being offered in a fragmented way. This often makes it difficult for

new licensees to launch international initiatives. This has prompted

Buma to examine how we can contribute to a more aggregated

offering of repertoire by means of (international) partnerships and/or

by creating new licensing models. These models need to be geared to

the needs of licensees as well as those of the rights owners.

In a world full of innovations, new value chains are emerging, often

driven by technological developments and new solutions. Buma

recognises the need to experiment with such innovations so that we

can adjust our services in good time, enabling us to continue to

provide added value to our members. We carefully assess whether

such innovations will retain their value in the future.

For example, we are looking at innovations like alternative validation

methods for metadata. By utilising the crowd (i.e. our members) and

continuously creating insight into data to facilitate this validation, we

can improve quality and subsequently reduce the lead time of

processes. This should ultimately lead to a more efficient collection

and distribution.

Blockchain technology appears to be very suitable for this.

In collaboration with various parties, we will look into what

opportunities this offers and what risks it entails. As the options for

on-site identification of music are becoming increasingly advanced,

Buma is looking into whether new technologies can also be used in

market segments where this was previously too costly. The aim of

all this is to enable even more accurate and faster payments to

rights owners.


One of the core tasks of Buma is to issue licences in the various

market segments where musical works are used. Below we describe

the developments and challenges in a number of these market

segments.

ONLINE In terms of turnover, this market segment is controlled by a number

of major Digital Service Providers (DSPs) like Apple, YouTube and

Spotify. Buma has managed to issue European licences to most of the

largest DSPs. The online market segment is pre-eminently a segment

where we compete with our sister societies. In this market segment,

we now only license the repertoire that is registered with us directly,

but at the Pan-European level. For licensed DSPs, we must always

specify exactly which repertoire is represented by us. For this reason,

it is increasingly important that our members register their works

with us adequately and correctly, so that we can submit the correct

claim with the relevant DSP in good time.

In addition to administering repertoire, CMOs like Buma constantly

advocate the preservation of copyright. In this context, Buma is taking

steps to challenge the European Safe Harbour legislation. This

legislation increasingly enables DSPs to hide behind the fact that they

classify themselves as mere conduits that have no responsibility for

ensuring any payment for the use of copyrighted content. A positive

development in this context is the EU’s adoption of the Copyright

Directive, which includes a new Article 17 stating that market parties

who distribute user-generated content have an obligation towards the

owners of the content. This strengthens the negotiating position of

CMOs like Buma. It will soon be decided in what form this Article 17

will be revised and ratified in Europe and then implemented in

national legislation.

TV Income from the TV market is under pressure due to the growth of

Video on Demand (VOD) services in the online market segment. The

use of these services, including Netflix and Videoland, is steadily

growing, which is reflected in Buma’s annual figures. This is due the

fact that the total screen viewing time of consumers (online and

linear) is no longer increasing. This means that the growth of VOD is

eating into the viewing time for linear TV. This decline of linear TV

started several years ago and is affecting the size of the market for TV

ads. Arguments have been presented to try to slow down this decline,

most of all those citing research findings showing the greater

effectiveness of TV ads compared to online advertising. Nonetheless,

we expect that the pressure on income from TV ads will persist.

With respect to the public networks, the Dutch government has

indicated that fundamental changes in the public broadcasting

system are needed. As a result, it is very likely that income from TV

ads on the public networks will decrease, which poses a major risk for

Buma.

The commercial TV companies are anticipating this transformation of TV

networks into media companies by widening their focus from linear

TV to multiple platforms. Their ultimate goal continues to be to reach

consumers with content and thus create a lock-in in their ecosystem.

To this end, they use revenue models based on ad income, as well as

those based on subscription systems (both of which are platform-

independent). Buma will adjust its services to this trend by offering

licences on a network-independent basis where possible.

In addition, there is pressure on our collective licensing models,

which offer convenience at an affordable price and in which we don’t

attribute a different value to music. If differentiation is going to be

applied to collective licensing, a logical adjustment would be to also

differentiate in terms of the value of music in such cases. The

challenge for Buma will then be to continue to offer the licensees

convenience, while also ensuring that the rights owners affiliated

with Buma receive a fair price for the use of their music.

OUTDOOR ENTERTAINMENT The outlook for this market segment continues to be favourable. Since

the beginning of this century, we have witnessed the growth of the

experience economy. In many cases, ownership is no longer

important. Having access to music is now more important than

owning it and experiencing it together, at events for example, is an

increasingly important component of the total spending on music.

Thanks to the spending power of consumers, combined with the good

infrastructure in the Netherlands and the right business spirit, the

events market continues to grow. However, as competition in the

outdoor entertainment market is intense, only high-quality events

survive in the longer run. For Buma, this means that we need to ‘stay

on the ball’. Here, too, we use innovative technological developments.

Buma has, for instance, gained experience with data web crawling to

identify new events. In the near future, Buma wants to supplement

such techniques with the option to use machine learning to make

vast quantities of gathered data useable.

BACKGROUND MUSIC We are seeing a shift in the services which suppliers of background

music provide to their clients, such as shops, restaurants and bars.

Instead of exclusively supplying hardware for instore music, new

international suppliers of corporate DSP services, such as Soundtrack

Your Brand, are focusing more on the application options offered by

streaming services.

PUBLIC USE Overall, we are seeing a stabilisation in the market segment for public

use, such as shops and stores, restaurant and bars, and work spaces.

Looking more closely at the various subsegments within public use,

the following differences are visible.

Shops and stores: In this subsegment, it is clear to everyone that the

street scene is changing. Shops and chain stores are disappearing,

often leaving voids in shopping areas. Overall, retail is growing, but

this growth is generated by online shops, not physical retail outlets.

An exception to this are pop-up stores, which are a growing trend.

However, these pop-up stores mostly generate lower income.

The decline in physical shops also leads to a reduction in income.

It is therefore crucial to improve efficiency by working together.

When it comes to marketing, Buma has a partnership with Sena

(under the umbrella of the Service Centre for Copyright and

Neighbouring Rights (SCAN)).

Restaurants and bars: We saw an increase in this market segment in

2018. Our turnover has recovered to pre-recession levels.

Work spaces: This market segment continues to experience slight

growth. Thanks to the aforementioned partnership with Sena, we can

operate more efficiently, which has had a positive impact on the

number of licences we have concluded.

It is also worth pointing out that Buma, Sena and Videma have

reached agreement with the Dutch employers’ and business

BUMA 9

organisations, VNO/NCW and MKB Nederland, for the public use

segment. This concerns a negotiating protocol that sets out how we

deal with the various sector organisations. The fee scheme for sector

organisations has been revised and this scheme has been renewed for

a period of five years.

ABROAD Buma’s income from abroad largely depends on the non-online

markets. Given that Buma is obviously dependent on the success of

its managed repertoire abroad, it is good to see that Dutch repertoire

continues to be successful beyond our borders.

ICT, FINANCE AND LEGAL AFFAIRS Properly functioning ICT systems are critical to the effectiveness of

Buma’s operations.

In 2018, Buma paid a lot of attention to its IT infrastructure in order to

safeguard its business continuity. The replacement of old hardware, a

key component of our IT infrastructure, has led to more stability and

a better performance (and will lead to cost savings from 2019).

Measures taken to create a clearer IT management structure have

also contributed to the stability and controllability.

Furthermore, the procedures with regard to data processing have

been brought in line with the laws and regulations in the area of

privacy and data protection (such as the GDPR).

The huge increase in data volumes and the developments in the area

of big data and artificial intelligence will place heavy demands on ICT

systems in the coming years. To be able to keep processing the

exponentially increasing data volumes, Buma has made the

replacement of the current system one of its top IT priorities.

The Investigation Committee has found that our financial

departments are too dependent on temporary staff members, which

involves the risk that too much knowledge is lost when there is a high

level of turnover among these (temporary) staff members. In 2018, we

put in place a new structure for our financial departments and we

hired new employees under permanent contracts.

As the legal department became understaffed in 2018 due to

prolonged sickness absence and high staff turnover, we are now

prioritising its reinforcement, with the further elaboration of

compliance being one of the top priorities. After all, the

administration of copyrights is Buma’s core activity and requires that

we have high-quality in-house legal expertise.

OUTLOOK Buma is not an isolated entity. When the world around us changes,

this also affects our operations, the further implementation of our

strategy and our results. The world around us is undeniably changing.

In terms of the economy, this is fed by the uncertainties around Brexit,

the threat of trade wars, declining consumer confidence and the

slowdown of economic growth. On the other hand, there are also

positive signs, such as the low unemployment levels in the economies

that are relevant to us. Against his background, we have to be

cautious in making predictions about the future, particularly when it

comes to investment results.

In this context, we have started the dialogue about the strategic

reorientation of Buma. This dialogue is taking place with a broad

group of stakeholders, and will in the course of 2019 lead to clarity

about the general strategy to be followed.

In April 2019, the decision-making process in the EU on the Directive

on Copyright in the Digital Single Market was completed. A key

component of this Directive is Article 17 (which was Article 13 in the

draft Directive ) addressing the ‘value gap’. The Directive makes an

important contribution to safeguarding copyright on the internet,

specifically on user-upload platforms. In addition, the decision-

making process on the Online Broadcasting Directive has been

completed; this Directive governs publications where multiple parties

are involved. The Dutch government has until the first half of 2021 to

implement these Directives in Dutch law.

We expect that the collection level for Buma in 2019 will be slightly

below the level achieved in 2018. It should be noted, however, that

despite our proactive collection policy, Buma is dependent on when

licensees or foreign sister societies pay royalties to Buma.

Consequently, around the end of the financial year, royalties may be

recognised earlier or later than expected.

The management costs are expected to decrease slightly compared to

the previous year as a result of improved efficiency, strict cost control

and the absence of one-off costs.

The financial result, consisting mainly of the results on the

investments, is uncertain, perhaps even more uncertain than ever. For

these reasons, we cannot make any statements about the future

outlook for Buma. However, we should note that our strategy for the

investment portfolio is to invest in a risk-averse manner, focused

mainly on retaining value.

IN CONCLUSION We are very grateful to the staff of Buma, who have continued to do

their jobs, even when the world around Buma went through turbulent

times. Together we have ensured that Buma can present good

financial results for 2018.

We look forward to continuing our work, together with our staff, the

Supervisory Board, the Council of Rights Owners and all our other

stakeholders, to achieve Buma’s mission of protecting the interests of

our members as best as possible and ensuring a fair remuneration for

the use of their work.

Hoofddorp, 23 May 2019

The Board:

Cees van Steijn, acting CFO

Siebe van Elsloo, acting CFO


BUMA

The copyright royalties were received from the following categories:

(x EUR 1,000) Realisation 2018 Realisation 2017

Restaurants and bars 14,891 14,294

Work spaces 17,171 17,392

Shops and stores 13,234 13,509

TOTAL GENERAL LICENCES BUMA 45,296 45,195

Radio, TV and Network Providers 71,430 68,177

Live performances 34,065 30,698

Online 13,681 13,618

Abroad 16,492 14,723

TOTAL BUMA 180,963 172,411

1.2 FINANCIAL RESULTS, MARKET DEVELOPMENTS AND OUTLOOK

1.2.1 COPYRIGHT ROYALTIES RECEIVED/RECEIVABLE

8%

180,963

172,411

170,982

164,691

158,329

152,201

DEVELOPMENT OF COLLECTION(x EUR 1,000)

2018

2017

2016

2015

2014

2013

135,000 140,000 145,000 150,000 155,000 160,000 165,000 170,000 175,000

COMPOSITION OF COLLECTION

Abroad

Online

Live performances

Radio, TV and Network Providers

Shops and stores

Work spaces

Restaurants and bars

7%

9%

19%

8%

39%

10%

180,000 185,000

BUMA 11

1.2.2 OPERATING COSTS

Buma’s expenses can be specified as follows:

(x EUR 1,000) Realisation 2018 Realisation 2017

Personnel costs 11,703 10,782

Accommodation costs 745 787

Amortisation and depreciation 1,522 1,405

Other expenses 12,059 13,559

TOTAL BUMA 26,029 26,533

* The costs at Buma have increased since 2016 due to an adjustment in 2016 of the allocation of the costs between Buma and Stemra.

The costs decreased by EUR 0.5 million in 2018 compared to 2017. This net decrease was mainly the result of lower other expenses,

due to the absence of a recurrence of the one-off costs incurred in 2017 (EUR 1.5 million), which was partly offset by a one-off increase

in personnel costs (EUR 0.9 million).

The changes per category of costs are shown in the table below.

26,029

26,533

25,080

21,237

20,878

20,989

20,088

DEVELOPMENT OF MANAGEMENT COSTS(x EUR 1,000)

2018

2017

2016*

2015

2014

2013

2012

0 5,000 10,000 15,000 20,000 25,000 30,000

Buma achieved a collection of EUR 181.0 million in 2018, which is

EUR 8.5 million higher than in 2017. We collected higher royalties in

nearly all categories.

The collection level for the general licences achieved in 2018 was

nearly identical to the level in 2017. Within the general licences, a

shift is visible from work spaces / shops and stores to restaurants and

bars. The reason for this is that shops and stores are increasingly

making way for restaurants and bars. In addition, we are seeing a

trend towards playing less music in work spaces.

The increase for Radio and TV was mainly due to the recognition in

2018 of additional income received from a number of large market

parties relating to royalties for 2017.

As in previous years, the royalties received by Buma from the live

performances market again increased in 2018. A large part of this

increase in royalties was due to the increase in the number of music

festivals, as well as the extension of these festivals into multi-day

events. The improved submission of setlists and playlists also means

that Buma has better insight into smaller performances and therefore

realises more licences. The number of theatre and cinema visitors in

2017 turned out to be higher than estimated. A subsequent settlement

was effected in respect of this in 2018.

The increase in royalties from the online market was primarily due to

the strong increase in online subscription services. This includes both

the music streaming services and the Video On Demand services.

Royalties from downloads decreased in 2018 compared to 2017, but

this drop is more than offset by the increase in the streaming

segment.

The royalties from shops and stores and work spaces increased in

2018 compared to 2017. This increase was achieved thanks to the

settlement of disputes about royalties at sister societies. As a result of

this, Buma received royalties relating to multiple years in 2018.


Realisation 2017 Personnel costs Accommodation costs Other expenses Amortisation and depreciation

Realisation 2018

26.533

921 42 1,500

26.029117

-504

The personnel costs increased in 2018 due to a number of (foreseen)

severance packages. These costs were partly offset by a permanent

reduction in the number of FTEs compared to 2017. The average

number of FTEs at Buma, which stood at 141.3 FTEs in 2017, decreased

to 122.7 FTEs in 2018.

As there was no recurrence of the one-off costs incurred in 2017, the

other expenses decreased by EUR 1.5 million in 2018. Amortisation

and depreciation increased by EUR 0.1 million compared to the

previous year due to recognition of depreciation on the investment

relating to the relocation to our new premises.

1.2.3 COVERAGE OF THE OPERATING COSTS

The costs of Buma are covered from six sources of income:

1. entrance fees and annual fees;

2. other income;

3. normative return on investments

4. balance of other financial income and expenses;

5. fixed administration fees on the collection from the categories

Online (15%), Abroad (5%) and Foreign Network Providers (10%); and

6. the remaining costs are divided into all categories of rights, with the

exception of Online, Abroad and Foreign Network Providers.

COVERAGE OF THE OPERATING COSTS

(x EUR 1,000) 2018 2017

TOTAL EXPENSES -26,029 -26,533

TOTAL COVERAGE

(1) Entrance and annual fees 853 803

(2) Other income 32 65

(3) Administration fee withheld upon distribution 4,426 3,589

Coverage of costs from income 5,311 4,457

(4) Normative return 2,804 4,253

(5) Balance of other financial income and expenses -410 -588

Coverage from normative return and other financial income 2,394 3,665

(6) Variable administration fee for other categories of rights 18,324 18,412

TOTAL COVERAGE 26,029 26,533

BUMA 13

The administration fee withheld upon distribution was EUR 0.8

million higher than in 2017. This was due to an increase in the

distribution for Online. The decrease in the normative return by EUR

1.4 million was partly offset by the decrease in financial expenses

(EUR 0.2 million). Combined with lower management costs (EUR 0.5

million), these developments resulted in a decrease in the variable

administration fee by EUR 0.1 million compared to 2017.

1.2.4 FINANCIAL INCOME AND EXPENSES

Investment policy

Since the 1990s, the royalties that cannot yet be distributed to the

rights owners are invested. The aim is to earn a return in a responsible

manner to partly cover the operating costs. The return earned on this

investment is eventually passed on to the rights owners by charging

lower administration fees against the copyright royalties to be

distributed. The most important prerequisite is that the risk profile of

the securities portfolio is limited. In recent years, the investment

profile, with 25% equities and 75% fixed-income equities, has been

moderately defensive. Vereniging Buma has placed the investments

with Stichting Buma Beleggingsfonds (BBF).

In 2018, the fixed-income portfolio had a strategic weighting of

approximately 75%, comprising government bonds with a credit

rating of AA or higher and an average term of approximately 5

years (12%), a fund investing in emerging market government

bonds (15%), two corporate bond funds (35%) and a mortgage fund

(13%). In 2018, the equities (shares) portfolio had a weighting of

around 25% and was invested through an equity fund in a portfolio

with a global spread. The criteria for corporate social responsibility

according to the United Nations Global Compact are applied for

this. The entire investment portfolio largely consists of directly

marketable securities and/or funds. The bulk of the investment

portfolio is held in euros. Apart from the emerging markets, where

investments are not in euros or where there is no hedging to the

euro within the relevant investment fund, the largest non-euro

positions are hedged by means of 3-month forward exchange

contracts. Because of the wide spread and the limited position in

shares, the risk profile of the investment portfolio as a whole is

relatively low.

Buma also uses a number of deposit facilities at a reputable

Dutch bank.

Vereniging Buma uses the investment income to cover (part of) the

operating costs. Because the results from investments can fluctuate

The composition of investments can be presented as follows:

SAA 2018Low-risk

market conditionsHigh-risk

market conditions

Cash and cash equivalents 0% 0% - 10% 0% - 25%

Equities 25% 20% - 30% 0% - 30%

Fixed-income securities 75% 70% - 80% 70% - 100%

considerably from year to year, a normative return on investments

is applied in advance each year. This normative return is determined

based on the advice of a financial adviser, which in turn is based on

the advice of the government’s Parameters Committee.

If the investment income exceeds the normative return, the

difference is added to the appropriated reserve. If it is lower than the

normative return, the difference is withdrawn from the appropriated

reserve, to the extent that this reserve is sufficient. The normative

return system ensures consistency in the (partial) coverage of the

operating costs. This means that, in years with high investment

income (higher than the normative return), a buffer is created in an

appropriated reserve that can be used in years with lower invest-

ment income (lower than the normative return).

Investment result

In 2018, the investment portfolio achieved a result of EUR -7.4

million. Compared to 2017, the result on the investment portfolio

decreased by EUR 18.5 million. In 2018, Buma achieved a return of

-4.4% on its investment portfolio, compared to a return of +5.9% in

2017. As the investment income was lower than the normative

return, an amount of EUR -10.2 million had to be withdrawn from

the appropriated reserve.

The Board has established the core of the investment policy based on

an Asset Liability Management (ALM) study. This study was conducted

with the support of a specialised firm in 2014. The basic principle is

having a relatively low risk profile with a limited downward risk and a

relatively attractive (expected) return. The ALM study produced a

norm in accordance with which, under normal market conditions,

between 20 and 30% is invested in equities and between 70 and 80%

in fixed-income equities. Under more volatile market conditions, the

bandwidth lies between 0% and 30% for equities and between 70%

and 100% for fixed-income securities.


Below a brief description is given of the development of the results

on the investments in relevant markets in 2018.

The negative return was mainly due to the investments in shares

(-9.6%) and those in emerging market debt (-7.7%). The main

underlying reasons for this were political uncertainties, including

the US-China trade war and Brexit, and the risk of weakening

growth in China.

2018 was a volatile year, in stark contrast to the previous years,

which were characterised by strong growth and low inflation. The

US economy showed the best performance thanks to an

acceleration of growth, with a real GDP growth rate in 2018 of

around 3%.

In Europe, growth slowed from 2.5% in 2017 to just shy of 2% in

2018. Although somewhat disappointing given the strong

momentum in 2017, generally speaking this was still a solid and

above-potential growth rate.

Trade wars and Brexit uncertainties formed a constant worry for

market participants in 2018 and triggered a significant downturn in all

stock markets Worldwide, shares fell by 11.2% in the past year; the

poorest performance in years. In this volatile environment, the US

stock market fared the least poorly (-6.2%), while European shares

(-13.2%) and emerging markets (-14.6%) both recorded disappointing

results. The main reason for this was the growth of US profits in an

US economy benefiting from the stimulus provided by budgetary

expansion. Emerging markets experienced a very difficult year due to

trade tensions.

Government bonds outperformed high-risk investments in 2018.

European government bonds recorded an average return of 1.0%.

By contrast, corporate bonds recorded the poorest performance since

2008; due to the low interest rates in Europe, the value of corporate

bonds fell by 1.3%. Emerging market debt bonds performed poorly in

2018, recording a negative return of -7%.

Through an investment fund, Buma invests in Dutch home

mortgages. Investments in these mortgages provide an attractive

interest income that is around 1.5% to 1.75% above market rates. The

return for the year 2018 was approximately 2.4%, consisting mainly of

(mortgage) interest received in the fund.

Our outlook for 2019 is moderately positive. We expect moderate

growth in the US and Europe and a limited decrease in growth in

China.

CHANGES IN APPROPRIATED RESERVE

(x EUR 1,000) 2018 2017

Income from securities and changes in value -7,383 11,111

Less: Normative return 2,804 4,253

ADDITION TO / WITHDRAWAL FROM APPROPRIATED RESERVE -10,187 6,858

BUMA 15

This distribution has shown a stable trend in recent years.

Management costs

Contribution to Social-Cultural Fund

Available for distribution

79.8%

14.4%

5.8%

2018

2017

2016

2015

2014

2013

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Management costs Contribution to Social-Cultural Fund Available for distribution

DISTRIBUTION OF ROYALTIES COLLECTED IN 2018

1.2.5 USE OF COLLECTED COPYRIGHT ROYALTIES

The collected copyright royalties are made available for distribution in their entirety after the deduction of costs to cover the operational costs

and the annual addition to the Social-Cultural Fund. The graph below shows the distribution of the collected royalties. It should be taken into

account that the allocation key for the joint costs between Buma and Stemra has changed from 75/25 to 90/10 starting from 2016.


15.4%

14.4%

14.7%

12.9%

13.2%

13.8%

5.7%

5.8%

6.1%

6.2%

6.4%

6.6%

78.9%

79.8%

79.2%

80.9%

80.4%

79.6%

1.2.6 DISTRIBUTIONS

CHANGES IN DISTRIBUTIONS (x EUR 1,000)

2018

2017

2016

2015

2014

2013

0 20,000 40,000 60,000 80,000 100,000

CMOs Abroad Rights owners Addition to Fund for Social and Cultural Purposes

In 2018, Buma distributed EUR 155.6 million to rights owners and

organisations with which it has a reciprocal contract. Despite a

decrease in the distributions relating to music use abroad (which

were exceptionally high in 2017 due to a catching up in the

recognition of royalties for previous years), overall the distributions

made by Buma increased by EUR 7.8 million compared to 2017. This

was due to an increase in Online and a number of one-off

distributions. For example, distributions in Buma’s General Rights

category relating to resolved disputes contributed to this increase.

1.2.7 COST NORM

Since the introduction of the Supervision Act in July 2013, the

government has imposed three cost norms for collective management

organisations. If these cost norms are exceeded, the reasons for this

must be explained. These cost norms are deemed to have been

exceeded if:

• The (gross) management costs in the year to which the annual

report pertains exceed 15% of the amount that was collected in

that year (the collection/royalties);

• The (gross) management costs in the year to which the annual

report pertains exceed 15% of the amount that was distributed in

that year (the distribution);

• The increase in management costs in the year to which the

annual report pertains compared to the management costs in the

previous year exceeds the increase in the consumer price index

for the year to which the annual report pertains.

In conjunction with Section 1(1)(a-c) of the Decree implementing the

Collective Management Organisations for Copyright and Neighbouring Rights

(Supervision and Dispute Resolution) Act: http://wetten.overheid.nl/

BWBR0033622/2016-12-21

BUMA 17

CHANGES IN DISTRIBUTIONS TOTAL

2018

2017

2016

2015

2014

2013

120,000 125,000 130,000 145,000 150,000 155,000135,000 140,000 160,000

156 million

57,85587,262

84,348

91,332

80,086

75,779

77,503

53,503

54,535

53,657

49,757

50,943

10,098

10,184

10,201

10,368

9,896

10,456

147 million

156 million

143 million

135 million

138 million

COST PERCENTAGES

(x EUR 1,000) 2018 2017

Collection by Buma 180,963 172,411

Distribution by Buma 155,573 147,747

Costs of Buma 26,028 26,533

Costs of Buma as % of the collection (gross) 14.4% 15.4%

Costs of Buma as % of the distribution (gross)* 14.6% 16.0%

Changes in costs of Buma compared to previous year -1.9% 5.8%

Average actual percentage withheld by Buma (net)** 12.6% 12.8%

* As Buma applies a system of settlement of the administration fee upon collection, the distributed royalties presented in the financial statements concern the net distribution. In order to determine the costs as a percentage of the distribution, the corresponding balance of the administration fee to be withheld in the year of collection (that of the previous year) and the administration fee upon distribution are added to the distributed royalties.

** The cost percentage that is actually charged to the rights owners is lower than the gross management costs for which the norms of the CvTA have been set. This is because predefined fixed withholding percentages are applied to certain collection categories, and also because a lower amount in costs is charged to rights owners thanks to the offsetting of costs against (financial) income.

In 2018, Buma’s cost percentage came to 14.4%, meaning that we complied with the norm that costs as a rule may not exceed 15% of

the collection.

Buma also complied with the norm that costs may not exceed 15% of the distributed amount.

INCREASE IN COSTS COMPARED TO THE CPIThe table shows that the costs of Buma increased by 1.9% (EUR 0.5 million) compared to 2017. Buma therefore complied with this norm.


MANAGEMENT COSTS AS A PERCENTAGE OF THE DISTRIBUTION

16.5%

16.0%

15.5%

15.0%

14.5%

14.0%

13.5%

13.0%

12.5%

12.0%2013 2014 2017 20182015 2016

14.0%14.3%

13.5%

14.7%

16.0%

14.6%

Buma Norm

MANAGEMENT COSTS (GROSS) AS A PERCENTAGE OF TOTAL ROYALTIES

16.0%

15.5%

15.0%

14.5%

14.0%

13.5%

13.0%

12.5%

12.0%2013 2014 2017 20182015 2016

13.8%

13.2%12.9%

14.7%

15.4%

14.4%

Buma Norm

1.2.8 ASSESSMENT OF FINANCIAL POSITION AND LIQUIDITY POSITION

Buma’s equity consists mainly of (appropriated) reserves. The

calculation of the solvency ratio based on equity divided by loan

capital does not have any direct meaning, as the balance sheet of

Buma mainly presents the activities that Buma performs for its rights

owners.

The liquidity ratio indicates the extent to which the debts can be

serviced in the short term from the cash and cash equivalents and

receivables. For a representative calculation of the liquidity ratio,

Buma’s investment portfolio is added to the cash and cash

equivalents, because this investment portfolio is in direct relation to

the copyright royalties to the distributed and because the investment

portfolio is kept highly liquid. On this basis, the liquidity ratio for

Buma is 1.04, which means that Buma can fulfil its obligations in the

short term.

1.2.9 CASH FLOWS AND THE FINANCING REQUIREMENT

As Buma distributes most of the copyright royalties received in the

year after their receipt, and a large part of the copyright royalties is

received at the beginning of the year, Buma has no need for external

financing. The above system leads to a ‘base stock’ of copyright

royalties to be distributed, which can be used to finance the current

expenses, as well as the investments.

The key cash flows for Buma are the copyright royalties received and

distributed during the year, as well as the operating expenses.

Furthermore, purchases and sales are made for the investment

portfolio.

1.2.10 RISK MANAGEMENT

As a collective management organisation, Buma performs a social

task: the management of the copyright of its affiliated rights owners,

as well as the management of music use.

RISK APPETITELike other organisations, Buma is exposed to various risks. As befits a

collective management organisation (CMO), Buma acts very prudently

in the performance of the tasks entrusted to it. The risk appetite in

the performance of these activities is low.

In December 2016, the Board of Buma endorsed the Dutch Governance

Code for the cultural sector. This code provides guidelines on, for

example, good governance, supervision and accountability in the

cultural sector, conflicts of interest and risk management. This code

forms the framework within which Buma has set up its strategic,

tactical and operational risk management.

Risks are managed by means of the planning & control cycle. This

cycle involves the annual updating of the strategic objectives and

their translation into annual plans, the annual determination of the

financial budget based on the annual budget, and the periodical

reporting of the progress and state of affairs on the basis of financial

and non-financial information. The monthly Business Review

Meetings of the Board with the various business units, in which the

progress and quality of the activities are thoroughly discussed, are an

important part of the planning & control cycle. In addition, these risks

are periodically discussed with the Audit Committee.

Buma is exposed to a number of risks, which break down into

strategic risks, compliance risks, operational risks and financial risks.

This section gives a brief, non-exhaustive overview of the risks and

how they are managed by our organisation.

STRATEGIC RISKSAt the strategic level, Buma is faced with changing markets as a result

of fast technological developments and the digitisation of the music

industry. The emergence in recent years of digital service providers is

a good example of this. The aim of our strategic risk management is

to identify, monitor and manage the key risks Buma is exposed to. In

2018, it was decided to start a strategic reorientation process with the

support of an external adviser. This process will start in 2019 and

should be completed midway through the year. In addition, Buma

closely monitors the technological developments that are relevant to

our organisation. Where possible, we anticipate the new opportunities

offered by technology. For instance, together with Sena we have

developed a proof of concept for a blockchain application that can

assist with the allocation of unidentified works.

COMPLIANCE RISKSBuma is subject to a range of legislation and regulations, including the

Supervision Act, Part 9 of Book 2 of the Netherlands Civil Code, the

Dutch Governance Code for the cultural sector, CMO guidelines and

international agreements made under the auspices of the CISAC. We

have implemented a privacy impact analysis in order to ensure that

we comply with the General Data Protection Regulation (GDPR), which

became effective in May 2018. We have also improved our financial

statements process through the implementation of special financial

reporting software. As a result, we now comply with the laws and regu-

lations with regard to the financial statements and the transparency

report.

In 2018, we implemented the Supervisory Board model. Therefore, the

managerial, supervisory and advisory roles and responsibilities are now

more clearly allocated than under the previous (hybrid) governance

model.

In 2018, Buma again received the quality mark for CMOs, meaning

that we continue to comply with the CMO quality mark criteria.

The collection, distribution and underlying financial processes take

place based on agreed procedures and are subject to regulations (such

as the Distribution Rules).

OPERATIONAL RISKSThe key operational risk is the risk of disruption to the timely and

comprehensive distribution of copyright royalties. The operational

risks also include the risk of disruption to the timely and

comprehensive collection of royalties from licensees. As IT plays a

crucial role in these processes, a significant portion of these risks are

related to the operating effectiveness of IT systems. To make the key

operational risks transparent, Buma has set up ‘InControl’, which is a

risk management and control system for the business processes. This

system is regularly assessed by the Internal Audit department.

ASSESSMENT OF THE DESIGN AND OPERATING EFFECTIVENESS OF THE INTERNAL CONTROLBuma has an Internal Audit department. The Internal Audit depart-

ment assesses the quality of procedures and the internal control of

internal business processes on the basis of an annually adopted audit,

and forms an objective opinion on the quality of the controls with

regard to the primary and supporting business processes, including

BUMA 19

governance, risk management and internal control measures. In 2018,

the first steps were taken to improve the effectiveness of the deploy-

ment of Internal Audit through an approach based on risk analysis.

The Internal Audit department reports hierarchically to the CFO and

has a direct reporting line to the CEO and to the Audit Committee of

the Supervisory Board. The Supervisory Board discusses the progress

made on the audit plan adopted for the relevant year and the

performance of the audits with Internal Audit at least once a year.

FINANCIAL RISKSBuma considers its key financial risks to be fraud risk, liquidity risk,

currency and interest rate risk and share price risk.

A financial budget is drawn up annually. The progress made is

reported to the Board on a monthly basis and then discussed in

Business Review Meetings with the various business units. The Board

makes the final decisions, sets budgets and monitors progress and

quality.

The fraud risk is mitigated through a proactive, structured and

focused approach in which the Internal Audit department plays a key

role. In addition, various measures are in place to manage fraud risks,

such as segregations of duties and authorisation matrices. These

measures apply to actions that create obligations (including

purchasing), payment transactions and contract management.

In the area of investments, management duties are strictly segregated

from custody and administration duties. The custody and

administration are performed by Kas Bank, an external party. Kas

Bank has an ISA 3402 (type I and type II) certificate.

There is a lead time between collection and distribution. During this

time, the resulting cash is invested in a risk-averse manner in order to

optimise the value of the cash. Each month, the cash flow and the

expected cash position are forecast through a liquidity forecast. In

principle, exchange rate fluctuations and interest rate changes do not

affect the financial results of our organisation. Generally, cash inflows

and outflows are denominated in euros. The investment fund,

however, has positions in currencies other than the euro. The policy is

to limit the impact of exchange rate fluctuations as much as possible.

Where there are positions due to the absence of a natural hedge of

transactions or items in other currencies, the organisation uses

financial instruments. In the past year, a Treasury Charter was drawn

up that describes in a transparent manner how the investment and

currency risks are controlled.

INFORMATION SECURITYInformation security relates to all IT resources and processes.

For Buma, guaranteeing availability, integrity and confidentiality is

crucial. To this end, a General IT Control Framework for the IT-

related processes has been adopted. In 2018, we completed the

implementation of a number of systematic measures to improve the

management of the risks associated with data processing. This

included accommodating the data processing activities at two

external locations, which has improved the recovery options, as well

as preparing for the migration to new hardware, and taking measures

to ensure the system continues to perform at a satisfactory level. In

2018, we also reviewed and, where necessary, tightened up our

measures with regard to data protection, in light of the fact that the

GDPR came into effect in the past year.

INSURANCEOur organisation has an insurance portfolio of effectively insurable

risks that cannot be prevented by internal control measures. This

portfolio includes a third-party liability insurance policy, supervisory

board and management board liability insurance policy, computer

insurance policy, and group business travel and accident insurance

policy. The portfolio is managed centrally and periodically assessed in

collaboration with an external insurance adviser.

TAX MATTERSBuma operates exclusively in the Netherlands and is subject to the

Dutch tax regime. Discussions are taking place with the Dutch Tax

and Customs Administration about the applicability of corporation

tax and the introduction of Horizontal Monitoring from 2019. These

talks are expected to be concluded in the course of 2019.

1.3 VOI@E QUALITY MARK DISTRIBUTION AUDIT

In the context of the triennial Distribution Audit for the VOI©E Quality

Mark for collective management organisations, the Distribution Rules

and Board decisions about the distribution by Buma were

continuously reviewed in 2018. This review was performed by the

Board in various Board and committee meetings, partly on the basis

of advice issued by the Council of Members and the Council of Rights

Owners respectively. The outcomes of this review included:

1. TAILOR-MADE SCHEME FOR SURCHARGE SERIOUS FOR BRASS BANDS AND WIND ORCHESTRAS (HF)The Board has followed the advice of the Council of Members and set

up a tailor-made scheme for the payment of the Surcharge Serious to

a group of rights owners in the brass bands and wind orchestras (HF)

section (decision of 24 January 2018). This tailor-made scheme is

based on the criteria applied in the transitional scheme resulting from

the decision on the collection from theatres (the ‘Schouw’ decision)

made on 17 June 2015.

2. ADJUSTMENT OF ‘SCHOUW’ TRANSITIONAL SCHEMEOn 17 June 2015, the Board made the decision to adopt a transitional

scheme, in line with the advice of the Distribution Streams

Committee dated 8 June 2015. On 26 February 2018, the New

Association of Dutch Composers (Nieuw Geneco) sent a letter with

the subject “Criteria For Schouw Transitional Scheme Set Too Tightly”.

In this letter, the Management of Buma/Stemra was asked to “look

again at a suitable ‘setting’ for the third criterion at the operational

level”. Based on the advice of the Management, the Board decided to

expand the ‘Schouw’ transitional scheme, as a result of which more

rights owners qualified for compensation (decision of 24 January

2018).

3. TEXT TVBased on the advice of the Management, the Board has decided to

continue the current scheme (valuation of Text TV in line with the

National Public Radio (EN) distribution category for another year), and

to ascertain during that period whether the underlying issue (prime

time vs. non-prime time) needs to be reconsidered (decision of 24

January 2018).

4. WARM-UP MUSICBased on advice of the Management, the Board has decided to

continue the current approach for dance events, meaning that – in

contrast to large concerts – no distinction is made for warm-up/

cool-down music. This decision may be reconsidered if a situation of

excessive use of warm-up/cool-down music occurs (decision of 24

January 2018).


5. NO COPYRIGHT THRESHOLD FOR COMMENTSThe policy of applying a copyright threshold of EUR 50 for

copyrighting a work was communicated to the rights owners in the

newsletter of 7 January 2016. On 14 February 2018, the Management

decided to maintain the policy of applying no threshold for handling

comments for works that have not yet been copyrighted.

6. DANCE REPERTOIREThe Management has decided to follow the advice of the Council of

Rights Owners received on 11 October 2018 regarding the adjustment

to the Dance reference repertoire (Dance Music (AD) distribution

category). With effect from the next General Rights distribution (for

the usage year 2018, to be distributed in September 2019), distribution

category AD will be distributed in accordance with this advice (email

from Board to Council of Rights Owners dated 22 October 2018).

7. SERIOUS MUSIC FRONT-OFFICE REVIEW COMMITTEEThe Board supports the final report of the Serious Music Front-Office

Review Committee dated 30 March 2018, in which the Board is advised

(based on the draft of 11 June 2016) to 1) support the Committee’s plan,

including approaching the Council for Culture and the Ministry, and 2)

commit itself in principle to: a) participating on behalf of Buma in

exploratory discussions and b) acting as administrator of the resulting

schemes with respect to the administration and distribution of new

cash flows. This report is a signal from all professional associations of

authors and all professional associations of publishers. The plan of the

Committee includes the idea to start a dialogue with the Council for

Culture in order to work together on resolving the ‘value gap’, which is

especially strongly felt in the serious music sector, between the

millions in government grants for music and the negligible share that

goes to composers.

8. DISTRIBUTION REVIEW CALENDAR 2019On 12 December 2018, the Board and the Council of Rights Owners

adopted the distribution review calendar 2019 (list of scheduled

distribution topics to be addressed).

9. MUSIC USE IN ROMAN-CATHOLIC CHURCH SERVICES This item concerns the repertoire that is used for payments for music

use in Roman Catholic church services. From the repertoire analyses, it

has emerged that the music use in the year 2017 – as cited in the

prayer books used – is largely identical to the current reference

repertoire for the Roman Catholic Church Music distribution category.

Replacing this repertoire, such as by means of an annual update based

on the prayer books, would significantly increase the gathering and

processing costs, without leading to a significantly better distribution

of the available royalties. The current reference repertoire will be

maintained. The Roman-Catholic landscape will be analysed again in

the next review to be carried out in three years’ time.

10. ‘SCHOUW’ DECISION In June 2015, the Board decided that the method for establishing the

amount available for the Other Concert Music (CS) music category

(mostly consisting of jazz) was outdated and needed to be adjusted. As

part of the implementation of the ‘Schouw’ decision with respect to

Buma’s General Rights distribution for 2016 (distribution made in

September 2017), the amount available for CS for the usage years 2016

and after will decrease substantially. Furthermore, an examination of

the statements received in the usage years 2013 through to 2015 has

shown that CS performances mainly take place in restaurants and bars

and at general events (this is also true for performances in the Live

Entertainment (AL) distribution category), and collection also takes

place in the same way. Accordingly, it has been proposed to make the

distribution method for CS identical to the method used for AL. That

means that the amount per performance (around EUR 24) established

annually for AL will also be made available for CS. This not only meets

the aim of having a 1-to-1 distribution, but also ensures that a (more)

realistic amount is made available, given the observed declining trend in

the number of performances in CS. However, as CS will remain a

separate category, it will still be possible to charge the Surcharge Serious

for this music. Following various consultations in 2016 and 2017, the

Council of Members and the Board support this adjustment to the

distribution method for CS proposed by the organisation.

In addition, on 22 May 2018, the General Members’ Meeting approved

the amendment to the Distribution Rules to bring them in line with the

Supervision Act. This amendment is included in the August 2018 edition

of the Articles of Association and Rules: https://www.bumastemra.nl/

wp-content/uploads/2018/08/BUM16651_Statutenboek-NL_2018_03-def.

pdf.

1.4 PROVISIONS OF THE ARTICLES OF ASSOCIATION REGARDING THE SUPERVISORY BOARD AND THE BOARD

The Supervisory Board of the Association consists of nine persons.

Only natural persons may be appointed as a member of the

Supervisory Board. Six persons are appointed in the manner referred

to in Article 17, paragraph 3, under a and b. Three independent

persons, including the independent Chairman of the Supervisory

Board, are appointed by the members in accordance with Article 17,

paragraph 2. A member of the Supervisory Board of the Association

must also be a member of the Supervisory Board of Stemra.

A. Four composers/songwriters, who are members or who are

composers/songwriters at a company that is a member, which

composers/songwriters are elected by the members/affiliates who

are composers/songwriters, including:

• composers of serious music

• composers/songwriters of entertainment music

• composers of media music

• songwriters

B. Two persons who are participant publishers (Article 8, paragraph 1)

or hold a managerial position in a publishing company that is a

participant (Article 9, paragraph 1), and who are elected by the

members/affiliates who are publishers.

C. Three independent persons, including one independent Chairman,

as referred to in Article 13, paragraph 2.

The Board consists of at least two Board members, one of which is the

Chairman and one of which is the Financial Director. Board members

may only be natural persons who are not a member or participant of

the Association and who do not sit on the Supervisory Board of the

Association. Board members are appointed and dismissed by the

Members’ Meeting on the recommendation of the Supervisory Board.

On the recommendation of the Supervisory Board, the Members’

Meeting appoints one of the Board members as Chairman and one of

the Board members as Financial Director.

The complete provisions of the Articles of Association regarding the

Supervisory Board are contained in Article 13 through to Article 19 of

the Articles of Association of Buma. The complete provisions of the

Articles of Association regarding the Board are contained in Article 21

through to Article 24 of the Articles of Association of Buma.

BUMA 21

1.5 TRANSPARENCY REPORT

Section Description Part of the annual report Page number

Section 2

2a Cash flow statement Cash flow statement 37

2bInformation about refusals to grant a licence on the basis of Article 2l(3) of the Supervision Act; 23

2cA description of the legal and governance structure of the collective management organisation; Explanation by the Board 7-10

2dInformation on entities directly or indirectly owned or controlled, wholly or in part, by the collective management organisation; Notes to the financial statements 38

2e

Information on the total amount of remuneration paid in the past financial year to the persons referred to in Section 2e(3) and Section 2f of the Supervision Act, and on other benefits granted to them;

Notes to the financial statements, Remuneration of the Board, Council of Members and Management 61-64

2fThe financial data referred to in Section 3 of the Transparency Report (Collective Rights Management Directive) Decree See Section 3

2g

A special report on the use of amounts withheld for the purposes of social, cultural and educational services, including the information referred to in Section 3 of the aforementioned Decree See Section 3

Section 3

3a

Financial information on rights revenue per category of rights managed and per type of use, including information on the income arising from the investment of rights revenue and the use of this income;

Operating statement, coverage of the operating costs, notes to the financial statements 11, 14, 51

3b

Financial information on the costs of rights management and oth-er services provided to rights owners by the collective management organisation, including a full description of at least the following items:

1. All operating costs and financial costs, with a breakdown per category of rights managed and, in the case of indirect costs that cannot be attributed to one or more categories of rights, an expla-nation of the method used for the allocation of these indirect costs;


2. Operating costs and financial costs, with a breakdown per category of rights managed and, in the case of indirect costs that cannot be attributed to one or more categories of rights, an explanation of the method used for the allocation of these indirect costs, to the extent that these costs relate to the rights man-agement, including the management costs which were deducted from or offset against rights revenue or income arising from the investment of rights revenue in accordance with Section 2g(4) and Section 2h(1-3) of the Supervision Act;


3. Operating costs and financial costs for services other than rights management, including social, cultural and educational services; Notes to the financial statements 47-48

4. Funds used to cover costs; Coverage of the operating costs 13

5. Amounts that were withheld from rights revenue, with a break-down per category of rights managed and per type of use, and the purpose of the withholding;

Notes to the financial statements, coverage of the operating costs 13

6. The percentages which the costs of the rights management and other services provided by the collective management organisation to rights owners represent compared to the rights revenue in the relevant financial year, per category of rights managed, and, in the case of indirect costs that cannot be attributed to one or more categories of rights, an explanation of the method used for the allocation of these indirect costs; Key figures of Buma 4

3cFinancial information on the amounts due to rights owners with a full description of at least the following items:

1. The total amount attributed to rights owners, with a breakdown per category of rights managed and per type of use;

Notes to the financial statements, copyright royalties to be distributed 49-54

2. The total amount paid to rights owners, with a breakdown per category of rights managed and per type of use; Key figures of Buma 4

3. The frequency of the payments, with a breakdown per category of rights managed and per type of use; 23

4. The total amount collected but not yet allocated to rights own-ers, with a breakdown per category of rights managed and per type of use, and indicating in which the financial year these amounts were collected;


5. The total amount allocated to but not yet distributed among rights owners, with a breakdown per category of rights managed and per type of use, and specification of the financial year in which these amounts were collected;



Section Description Part of the annual report Page number

6. If a collective management organisation has not carried out the distribution and payment within the period laid down in Section 2i(3) of the Supervision Act: the reasons for the delay;


7. The total balance of undistributed amounts, with an explanation of the use of these amounts;


3d

Information on the financial relationship with other collective man-agement organisations, with a description of at least the following items:

1. Amounts received from other collective management organisa-tions and amounts paid to other collective management organisa-tions, with a breakdown per category of rights managed, per type of use and per organisation; Key figures of Buma 4

2. Management costs and other withholdings from the rights revenue due to other collective management organisations, with a breakdown per category of rights, per type of use and per organi-sation; Key figures of Buma 4

3. Management costs and other withholdings from the rights revenue paid by other collective management organisations, with a breakdown per category of rights and per organisation; Key figures of Buma 4

4. Amounts distributed directly to rights owners originating from other collective management organisations, with a breakdown per category of rights and per organisation. Key figures of Buma 4

Section 4

4a

The amounts withheld in the financial year for the purposes of social, cultural and educational services, with a breakdown per type of purpose and, for each type of purpose, with a breakdown per category of rights managed and per type of use; Notes to the financial statements 52

4b

An explanation of the use of those amounts, with a breakdown per type of purpose including the costs of managing amounts withheld to fund social, cultural and educational services and of the separate amounts used for social, cultural and educational services. Notes to the financial statements 52

Q1 Q2 Q3 Q4

Restaurants and bars X

Work spaces X

Shops and stores X

Radio, TV and Network Providers X

Live performances X

Online X X X X

Abroad X X X X

1.5.1 INFORMATION ABOUT REFUSAL TO GRANT A LICENCE

Anyone who plays music belonging to the repertoire administered by

Buma must obtain prior permission for this from Buma. Provided that

certain standard conditions are met, including the payment of a fee,

Buma grants this permission in the form of a licence. Buma does not

refuse to grant licences. However, Buma does have the option of

suspending its permission if certain contractual obligations, including

payment of the fee due, are not met. If music is published or about to

be published without the necessary permission, Buma exercises its

right of prohibition.

1.5.2 DISTRIBUTION FREQUENCY

The table below shows the distribution frequency per type of use

within Buma.

1.5.3 COMMENTS AND COMPLAINTS

Buma regards the number of comments and complaints we receive as

a measure of the extent to which we have succeeded in identifying

copyrighted work and making the subsequent allocation and

distribution. By reducing the distribution failure rate, we can ensure

that there are fewer unresolved comments and hence fewer

complaints. In the reporting year 2018, Buma received three

complaints, two of which were resolved in mid-2018. The remaining

complaint was resolved in early 2019.

BUMA 23

2. SUPERVISORY BOARD REPORT


2. SUPERVISORY BOARD REPORT2.1 REPORT OF THE SUPERVISORY BOARD OF BUMA

INTRODUCTION AND CONTEXT2018 was in all respects a transitional year for Buma. The transition to

a new structure included the shift from the old governance model to

the new Supervisory Board model, and from a Board with a single

Director to a two-member Board with two newly appointed acting

Board members, and the replacement of the Members’ Meeting by the

Council of Rights Owners. During this period of transition, the

Supervisory Board closely supervised the (acting) Board member(s) in

close communication with the latter.

The general context in which Buma operated in 2018 is described in

the Board report. This context included the follow-up given to the

recommendations of the Investigation Committee (Smits/Winter

Committee), which conducted its investigation on behalf of the Dutch

Copyright Supervisory Board (CvTA). For the Supervisory Board of

Buma, one of the key concerns in its supervision was that the

recommendations from this investigation were followed up in 2018, so

as to ensure that Buma/Stemra can also make a fresh start in terms of

its internal supervision. For the current Board, this investigation marks

the conclusion of a turbulent period.

In addition to covering the Board’s usual reporting to the Supervisory

Board on its meetings and decisions, this Supervisory Board report

discusses the following in more detail: the new governance structure

(new governance and supervision model), the report of the

Investigation Committee, the external supervision by the CvTA, the

Supervision Agenda, the recruitment and appointment of the acting

Board members and the extra General Members’ Meeting on 29

October 2018.

In its supervision, the Supervisory Board always keeps in mind that

Buma has been set up by and for its members. The Buma/Stemra

organisation needs to serve this mission and be aware that the rights

and royalties of our members and affiliates are our key concern. This

awareness is the guiding principle for the Supervisory Board and we

strive to implement this in the working method, decision-making and

recommendations, and want to render ourselves accountable about

this. The Supervisory Board also sees this awareness among the acting

Board members and, to the extent that the Supervisory Board can

assess this, among staff.

The Supervisory Board would like to thank the staff and the interim

members of the Board of Buma for their exceptional work and

dedication and their contributions towards achieving the mission of

Buma/Stemra. In this period of transition, they managed to surpass

the collection and distribution targets set for 2018 and to stay calm.

NEW GOVERNANCE AND SUPERVISORY BOARD MODELSince mid-2018, Buma/Stemra applies the Supervisory Board model set

out in the Dutch Governance Code for the cultural sector, and more

specifically the Supervisory Board model of VOI©E.

This new governance structure was adopted by the General Members’

Meeting of Vereniging Buma on 22 May 2018 by approving the

amendment to the Articles of Association. This General Members’

Meeting also appointed the members of the Supervisory Board,

consisting of six members appointed on the recommendation of the

affiliated professional associations and one independent Chairman.

The membership of the Supervisory Board was completed at the

General Members’ Meeting on 29 October 2018 through the

appointment of its two independent members.

On 22 May 2018, no advice had yet been received from the Works

Council regarding the change in the government structure. For this

reason, the General Members’ Meeting voted to change the

governance structure on condition that this change be endorsed

by the advice from the Works Council.

On 31 May 2018, the Works Council issued its advice, endorsing the

change on condition that the report of the Investigation Committee

not give rise to any findings cautioning against this change.

Thereupon the former Board decided to implement the new

governance structure, with the promise to the Works Council that it

can rest assured that the findings and recommendations of the

Investigation Committee would be followed up thoroughly and

carefully, and the Works Council would be involved in this process. On

22 June 2018, the supervision of the Board of Buma by the Supervisory

Board was effectuated.

Buma’s governance structure includes the following bodies: the

General Members’ Meeting, the Council of Rights Owners, the Board,

the Supervisory Board and the Works Council. As the professional

associations have the right to nominate members of the Supervisory

Board, these associations are also involved in the governance of

Buma. The authorities vested in these bodies are described in the

Articles of Association and the Rules. Buma’s policy is decided and

its success assessed within this structure.

This structure is not only new to Buma, but also gives rise to

considerable complexity due to the involvement of a large number of

people in the various bodies. Consequently, the effectiveness of this

structure depends not only on the rules, but also on how everyone

involved works together and how the various bodies use their

powers. In this new structure, the Supervisory Board also supervises

the interaction between the Council of Rights Owners and the Board.

A key aspect of this interaction is that the Board involves the Council

of Rights Owners in an adequate and timely manner in the topics

that concern the Council, and that the Board provides sufficient

information to the Council and incorporates input from the Council

in its decision-making in a way that is visible to the Council of Rights

Owners and the Supervisory Board.

In its report, the Board has also included the issues that were

discussed with the Council of Rights Owners.

Buma is supervised by the CvTA. In addition to the Board, the

Supervisory Board also consults periodically with the CvTA on the

basis of the Supervisory Agenda.

SUPERVISION AND REPORT OF THE INVESTIGATION COMMITTEEOn 18 September 2018, the report of the Investigation Committee

was published on Buma’s website. In 2018, the supervision focused in

large part on the significance of this report for the Board and the

supervision of Buma, in addition to the general supervision aspects.

In a series of meetings, the CvTA and the Supervisory Board

translated the interpretation of the report of the Investigation

Committee into internal and external supervision, each within the

BUMA 25

scope of its own roles and responsibilities. To this end, at least five

meetings were held with at least five members of the Supervisory

Board and the CvTA. In addition, the Supervisory Board held special

meetings, both by telephone and in person, fully devoted to the

Investigation Committee’s draft and final report on its investigation

and all related matters.

The Supervisory Board has translated the report’s significance to the

internal supervision based in the context of the general supervision

and has incorporated this in its own Supervision Agenda. This

Supervision Agenda has been posted on Buma’s website.

Based on this Supervision Agenda, a second Board member, the acting

CFO, was appointed in 2018 (see below under 6), and the Audit

Committee was expanded through the nomination of two

independent Supervisory Board member with a finance/IT profile.

The Board translated the Supervision Agenda into its Action Plan in

2018. The Supervisory Board supervises the implementation of this

plan.

The Supervisory Board has involved the key stakeholders, the Works

Council and the Council of Rights Owners in the internal supervision.

The Supervisory Board and the Works Council discussed the internal

supervision and the report of the Investigation Committee, including

in the context of the condition which the Works Council had set for

its positive advice on the change in governance. The results of this

meeting have been translated into the Supervision Agenda. A concrete

example being the evaluation of the redesign of the structure of Buma

on the basis of indicators that must be established in consultation

with the Works Council. Another concrete example is the

reinforcement of the role of the Works Council and of the Council of

Rights Owners through education.

Prior to the publication of the report of the Review Committee, the

Supervisory Board was given access to it under embargo. Following

the publication of the report, the Supervisory Board discussed the

consequences of the report for the internal supervision and the

Supervision Agenda with the Council of Rights Owners.

The Board and the Supervisory Board invited the chairmen of the

professional associations to take part in discussions about the report

of the Investigation Committee. Almost all professional associations

accepted this invitation.

On 18 September 2018, the report of the Investigation Committee and

the Supervision Agenda were posted on Buma’s website.

SUPERVISORY BOARDIn the notes to the report of the Supervisory Board, an overview is

provided of the dates of the meetings of the Supervisory Board and

the subjects discussed and decisions made by the Supervisory Board.

The Supervisory Board has appointed three committees: the Audit

Committee, the Stakeholders Committee and the Remuneration

Committee. These committees have the task to explore and prepare

subjects so as to enable a more detailed discussion of dilemmas

within the Supervisory Board.

In the notes to this report, an overview is provided of the dates of the

meetings of the committees and the subjects discussed in the

committees.

The Supervisory Board discussed the status of the organisation of

Buma/Stemra with the Board in the lead up to their written reporting.

The quality of the financial, ICT and legal functions was discussed

and explained through presentations by managers. This not only

provided the Supervisory Board with information about the content,

but also gave the Supervisory Board an impression of the people who

are responsible for managing these functions.

The Board informed the Supervisory Board that the financial function

was reinforced in the course of 2018. This was also confirmed by the

auditor.

With respect to the IT structure and function and the risks associated

with the current IT systems, the Board is acutely aware of the need to

replace these. The systems are reliable at present, but due to various

factors, including the exponential increase in data, it cannot be

guaranteed that they are future-proof. The Board and the Supervisory

Board recognise that the context of Buma’s new strategy affects the

decision-making on a new ICT structure.

Accordingly, in the course of 2019 a decision will be made on the

rearrangement and replacement of (elements in) the ICT structure.

The Supervisory Board and the Board continuously discuss the

accuracy, volume, sources and speed of collection of copyrights, and

obviously also the accuracy, volume and speed of distribution of

copyrights. In addition, the size and purpose of the investment

portfolio was discussed in relation to the speed and frequency of

distributions of copyright royalties.

Buma’s new strategy is a top priority. The Board communicated the

process to develop this strategy, the involvement of all stakeholders

and the schedule for this. This process will start in the first quarter of

2019.

In the meetings, no issues were discussed that led to a conflict of

interest for the members of the Supervisory Board.

MEMBERSHIP OF COMMITTEES

Audit Committee

1. Mr R. Hopstaken

2. Ms J. Messerschmidt

3. Mr M. Swemle

4. Mr N. Walboomers

Remuneration Committee

1. Ms J. Messerschmidt

2. Ms J. de Zwaan

3. Mr A. Molema

4. Mr R. van Vliet

Stakeholders Committee

1. Ms J. de Zwaan

2. Mr A. Fiumara

3. Mr R. Hopstaken

4. Mr R. Meister

5. Mr R. van Vliet


INTERACTION BETWEEN SUPERVISORY BOARD AND COUNCIL OF RIGHTS OWNERS The Supervisory Board met tree times with (a delegation of) the

Council of Rights Owners in 2018. At these meetings, the report of the

Investigation Committee and the profiles and nomination of the acting

Board members were discussed.

INTERACTION BETWEEN COUNCIL OF RIGHTS OWNERS AND WORKS COUNCIL In 2018, the Supervisory Board met six times with the Works Council

and also had a number of non-plenary discussions with the Works

Council. These included four plenary meetings about the draft and

final report of the Investigation Committee, two meetings with a

delegation of the Works Council in the context of Section 24(1) of the

Works Councils Act, and several non-plenary discussions about the

recruitment and selection of the acting Board members.

EMPLOYER ROLE: APPOINTMENT OF TWO ACTING BOARD MEMBERS On the occasion of the publication of this report, the Chairman of the

Board, Mr Wim van Limpt, announced that he was resigning his

position of Chairman and member of the Board of Buma as of 29

October and that he would be leaving Buma as of 31 December 2018.

The Supervisory Board collectively participated in the recruitment and

selection of the acting Board members. Based on the profiles, it was

decided to appoint Mr Siebe van Elsloo, who already served as acting

Financial Director since 20 May 2018, as acting CFO. Based on the

profile, and with the assistance of an executive search firm, Mr Cees

van Steijn was recruited as acting CEO.

These acting Board members will have the task to restore calm within

and around Buma and to restore confidence in Buma. To this end, they

will need to translate the Supervision Agenda into policy and

implement this policy, besides the day-to-day management of Buma.

The Board members have done their utmost to rise to this challenge

from their first day of work at Buma. First of all by directing the

operations of Buma, and also, based on the Action Plan, by making a

start with drawing up the strategy, analysing Buma’s core functions

and evaluating the structure.

GENERAL MEMBERS’ MEETING The Board convened an extra General Members’ Meeting, which was

held on 29 October 2018. In addition to the standard subjects, such as

the minutes for the previous meeting, the agenda for this General

Members’ Meeting included:

• Announcement by the Chairman of the Supervisory Board that Mr

van Limpt had decided to resign his position as Chairman and

member of the Board after this meeting. As a result, the Supervisory

Board was faced with the situation where, pursuant to the Articles

of Association, two vacancies on the Board needed to be filled.

• Discussion of report of the Investigation Committee; this covered

the following:

* report of the Investigation Committee

* Supervision Agenda

* opinion of the Works Council

* questions from ten participants about Buma reports

• Introduction to Council of Rights Owners;

• Transparency report, including financial statements Buma 2017;

• Adoption of and feedback on social and cultural policy;

• Amendment to Articles of Association and Rules (addition of third

independent member to the Supervisory Board; proposal by ten

members to make the financial statements available to the

General Members’ Meeting at least two weeks in advance in

future; adoption of E-Voting Rules);

• Appointment of two independent members of the Board.

The General Members’ Meeting adopted the following motions:

The General Members’ Meeting of 29 October 2018:

• consented to the interim appointment by the Supervisory Board,

pursuant to its authority thereto (under Article 21.10 of the Articles

of Association), of Mr Cees van Steijn as the first Board member

(Chairman of the Board) and Mr Siebe van Elsloo as the second

Board member (Financial Director) of Buma;

• requested not to convene an extra Members’ Meeting to decide on

the permanent filling of the interim vacancies that have arisen, but

to put this item on the agenda for the next regular annual meeting

for 2019 (Articles 21.10 and 21.2 of the Articles of Association);

• approved the financial statements 2017 of Buma and the financial

statements 2017 of Stemra;

• granted discharge from liability to the Board and Management of

both Buma and Stemra;

• approved the proposals with regard to the Articles of Association

and Rules; and

• appointed Mr Ruud Hopstaken and Ms Jolanda Messerschmidt as

independent members of the Supervisory Board.

In the lead-up to the General Members’ Meeting, the Board and the

Supervisory Board organised informal evening events to enable the

members and affiliates to obtain information in connection with this

upcoming meeting. Although the turnout was very low, the Board and

the Supervisory Board are committed to organising these informal

evening events ahead of each General Members’ Meeting.

FINANCIAL ANNUAL REPORT AND APPROVAL BY THE SUPERVISORY BOARD The draft annual report 2018 was discussed with the Audit Committee

on 9 May 2019 and with the full Supervisory Board on 23 May 2019,

both times in the presence of the auditor. The auditor’s management

letter was discussed with the Audit Committee on 14 March 2019, also

in the presence of the auditor.

EDUCATION AND SELF-ASSESSMENT In 2018, the Supervisory Board participated in education activities

together with the Board, the Council of Rights Owners and the Works

Council. On 13 November 2018, under the guidance of an external

facilitator, the Council of Rights Owners, the Board, the Works Council

and the Supervisory Board worked on their understanding of the

different roles of the various bodies and on formulating shared

principles, with regard to allocating roles and sticking to defined roles,

for example. In the same context, nearly all members of these bodies

participated in the educational event of VOI©E on 25 September 2018.

In 2019, based on the experiences gained in 2018/2019, the Council of

Rights Owners, the Board, the Works Council and the Supervisory

Board will organise another joint education programme to improve the

effectiveness of the governance structure.

The Supervisory Board did not perform a self-assessment in 2018.

In 2019 – within one year of the appointment of the full Supervisory

Board – the Supervisory Board will assess its own performance under

the guidance of an external facilitator.

RETIREMENT SCHEDULE In early 2019, the Supervisory Board adopted a retirement schedule

that provides for the phased appointment and retirement of its

members.

BUMA 27

OTHER POSITIONS/OCCUPATIONS OF MEMBERS OF THE SUPERVISORY BOARD

Ms Josephine de Zwaan Paid

Unpaid

Supervisory Board member of Fairphone B.V. (chairman)Supervisory Board member of Stichting Cito (chairman)Supervisory Board member of Stichting Vilans (vice-chairman)Supervisory Board member of Stichting Hogeschool Leiden (vice-chairman)Board member of Stichting Administratiekantoor Aandelen Triodos Bank N.V. (chairman)

Board member of Stichting Academeia Chairman of the Board of Stichting Register Code Sociale Ondernemingen

Mr Anthony Fiumara Paid

Unpaid

ComposerComposition lecturer at Fontys School of the Arts Music journalistPartner at De MerkcultuurBoard member of Stichting Brein

Board member of Stichting TemkoBoard member of Amstel Music AwardBoard member of Stichting Asta NielsenBoard member of Stichting Nieuw Geneco

Mr Ruud Hopstaken Paid

Unpaid

Supervisory Board member of Central Agency for Reception of Asylum Seekers (COA)Supervisory Board member of Arthrogen BV

Supervisory Board member of PharmAccess Group AmsterdamTreasurer of Stichting JDRF

Mr Rene Meister Paid Composer/arrangerOwner of BEAR studioProducerMusic compilerPerforming artistFounder of BEAR project

Ms Jolanda Messerschmidt RA Paid

Unpaid

Director/owner of TB&E Advice BVSupervisory Board member of BMW Finance NVSupervisory Board member of BMW International Investments BVExternal adviser at Align Matters

Treasurer of Benoordenhout residents’ association

Mr Arriën Molema Paid

Unpaid

Songwriter/composer/producerGuitarist and business manager of Room ElevenVice-chairman of BAM!Member of Review Committee of Utrecht Municipality for Cultural Memorandum

Board member of CIAM

Mr Marc Swemle Paid Director/owner of VaVaVoom! Music Company since 1996Director/owner of Swemle Media Holding B.V. since 2001Board member of BCMM since 2012

OTHER POSITIONS OF MEMBERS OF THE SUPERVISORY BOARD, COUNCIL OF RIGHTS OWNERS AND BOARD UNDER THE ARTICLES OF ASSOCIATION


OTHER POSITIONS/OCCUPATIONS OF MEMBERS OF THE SUPERVISORY BOARD

Mr Raymond van Vliet Paid

Unpaid

Director/Major Shareholder of Cloud 9 Music Holding

Vice-chairman of Nederlandse Muziek Uitgevers Vereniging (NMUV)

Mr Niels Walboomers Paid

Unpaid

Managing director of Sony/ATV Music Publishing BeneluxDirector/Major Shareholder of Walboomers Publishing BVDirector/Major Shareholder of Nelis Holding BVBoard member of Cliq Digital AGBoard member of Donemus

Board member of Nederlandse Muziek Uitgevers VerenigingBoard member of BMPA (Belgium Music Public Association)

All members of the Supervisory Board of Vereniging Buma must also be a member of the Supervisory Board

of Stichting Stemra.

OTHER POSITIONS/PROFESSION OF MEMBERS OF THE COUNCIL OF RIGHTS OWNERS

Mark Bremer Paid

Unpaid

Managing Director of Universal Music Publishing Benelux

Chairman of Nederlandse Muziek Uitgevers Vereniging (NMUV)

Iason Chronis Paid

Unpaid

Composer/producer/DJOwner of Animal Language recordingsEvents organiser

Board member of Popauteurs.nl Board member of DDJFMember of Popcoalitie

Ben van den Dungen Paid

Unpaid

Performing artistComposerLecturer at Rotterdams Conservatorium CodartsProducer at JwajazzProducer at Musica Extrema

Board member of Stichting Wereldmuziek in Nederland

Hans Everling Paid

Unpaid

Composer/producerDirector/owner of SOB Audio Imaging BVProduction Director at Mall Voice NetherlandsDirector/owner of Haramitsu Holding BV

Vice-chairman of BCMM

Monique Krüs Paid

Unpaid

Composer/producerSoprano/voice coach

Board member of Nieuw Geneco

Wim Kwakman Paid

Unpaid

Music publisher of Pennies From Heaven BVDirector/Major Shareholder of Pennies From Heaven BV

Board member of Nederlandse Muziek Uitgevers Vereniging (NMUV)

BUMA 29

All members of the Council of Rights Owners of Vereniging Buma must also be a member of the Council of Rights Owners of Stichting Stemra.

OTHER POSITIONS/PROFESSION OF MEMBERS OF THE COUNCIL OF RIGHTS OWNERS

Davo van Peursen Paid

Unpaid

Managing Director and Director/Major Shareholder of Donemus Publishing BVBoard secretary at Stichting Donemus Beheer

Member of Programme Board at Omroep RijswijkChairman of Vereniging van Muziekhandelaren en -uitgevers in Nederland (VMN) since June 2017

Aafke Romeijn Paid Composer, producer and performing musicianWriter and journalistTreasurer of BAM! Affiliate of ECSAArtistic leader at Stichting Babi Pangang Producties

Martijn Schimmer Paid Director/owner of TFS Media GroupDirector/owner of Schimmer Music ProductionsDirector/owner of Online Cookie Collective BVDirector/owner of Talents for Brands B.V.Director/owner of Track Media Music PublishingDirector/owner of SMP Copyrights BV

Koen Vergouwen Paid

Unpaid

Director/Major Shareholder of Tierolff Muziekcentrale BV

Vice-chairman of VMN

Johan van der Voet Paid Songwriter/composer/producerDirector/owner of Soundgram Post Production since 1996Director/owner of Studio Soundgram & Soundgram Publishing since 2014Guest lecturer at various Colleges

Rita Zipora Verbrugge Paid

Unpaid

Performing musician and songwriterModerator/presenter at music eventsSecretary and Board member of BAM!Choir conductorChairman of POPnlMember of music committee of Amsterdam Arts CouncilMember of monitoring committee of Council for Culture

Affiliate of Popcoalitie


All members of the Supervisory Board of Vereniging Buma are or have also been members of the Supervisory Board of Stichting Stemra.

OTHER POSITIONS/OCCUPATIONS OF MEMBERS OF THE BOARD UNDER THE ARTICLES OF ASSOCIATION

Cees van Steijn Paid

Unpaid

Non-executive director of Stak Bouwstate

Advisory Board member of Boer & Croon Corporate FinanceBoard member of Stichting Buma BeleggingsfondsBoard member of Stichting Stemra BeleggingsfondsBoard member of Stichting SCAN

Siebe van Elsloo Paid

Unpaid

Member of Supervisory Board of Centraal Instituut voor Toetsontwikkeling (Cito)Chairman of Audit Committee of CitoMember of Supervisory Board of EYEChairman of Audit Committee of EYE

Treasurer of Stichting 1877Treasurer of Stichting de Groene BeheerBoard member of Stichting Buma BeleggingsfondsBoard member of Stichting Stemra BeleggingsfondsBoard member of Vereniging VOI©ESecretary/Treasurer of Stichting SCAN

Wim van Limpt Unpaid Chairman of the Board of Stichting Buma Beleggingsfonds (until 7 November 2018)Chairman of the Board of Stichting Stemra Beleggingsfonds (until 7 November 2018)Board member of Stichting SCAN (until 29 October 2018)Board member of Stichting BreinVice-chairman of Vereniging VOI©E (until 2 October 2018)Board member of Stichting Buma/Stemra ProjectenBoard member of FastTrack Board member of Stichting Beheer Rechten Fingerprinting Database

BUMA 31

3. APPROVAL ON THE CONSOLIDATED FINANCIAL STATEMENTS32 BUMA - ANNUAL REPORT 2018

SUPERVISORY BOARD

Ms Josephine de Zwaan Chairman

Mr Anthony Fiumara Member of the Supervisory Board

Mr Ruud Hopstaken Member of the Supervisory Board

Ms Jolanda Messerschmidt Member of the Supervisory Board

Mr Rene Meister Member of the Supervisory Board

Mr Arriën Molema Member of the Supervisory Board

Mr Marc Swemle Member of the Supervisory Board

Mr Raymond van Vliet Member of the Supervisory Board

Mr Niels Walboomers Member of the Supervisory Board

BOARD

Mr Siebe van Elsloo Acting Chief Financial Officer

Mr Cees van Steijn Acting Chief Executive Officer

After having audited the financial statements of Vereniging Buma, Mazars N.V. has issued an unqualified auditor’s report in respect of the

financial statements. We propose to adopt the financial statements 2018 of Buma in accordance with Article 27, paragraph 7, of the Articles of

Association and to grant discharge from liability to the members of the Board in respect of the performance of their duties in the financial

year 2018.

Hoofddorp, 23 May 2019

3. APPROVAL ON THE CONSOLIDATED FINANCIAL STATEMENTS

BUMA 33

CONSOLIDATED FINANCIAL STATEMENTS34 BUMA - ANNUAL REPORT 2018

4.1 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2018

After appropriation of the result

(x EUR 1,000) 31/12/2018 31/12/2017

ASSETS

FIXED ASSETS

Intangible fixed assets (1) 3,598 3,937

Tangible fixed assets (2) 2,499 2,403

CURRENT ASSETS

Receivables

Accounts receivable (3) 9,586 16,199

Other receivables (4) 613 1,309

Taxes and social security contributions 1,669 1,073

Prepayments and accrued income (5) 2,003 6,825

13,871 25,406

Securities (6) 161,657 167,265

Cash and cash equivalents (7) 58,269 51,296

TOTAL ASSETS 239,894 250,307

(x EUR 1,000) 31/12/2018 31/12/2017

LIABILITIES

Reserves (8)

Continuity reserve 1,855 1,855

Appropriated reserve 13,430 23,617

15,285 25,472

Provisions (9) 7,755 8,279

Non-current liabilities (10) 5,216 4,897

Current liabilities

Copyright royalties to be distributed (11) 192,011 189,371

Accounts payable 1,626 6,365

Taxes and social security contributions 367 283

Other liabilities (12) 14,680 13,265

Accruals and deferred income (13) 2,954 2,375

211,638 211,659

TOTAL LIABILITIES 239,894 250,307

BUMA 35

4.2 CONSOLIDATED OPERATING STATEMENT FOR 2018(x EUR 1,000) 2018 2017

INCOME (14)

Administration fee withheld upon distribution 4,426 3,589

Administration fee withheld in the year of collection 18,323 18,412

Contributions and registration fees 853 803

Other income 32 64

Total income 23,634 22,868

EXPENSES

Personnel costs (15) 11,702 10,782

Amortisation and depreciation 1,521 1,405

Accommodation costs 770 786

Other expenses (16) 12,035 13,561

Total operating expenses 26,028 26,534

Balance of financial income and expenses -2,394 -3,666

Interest income and expenses 833 1,138

Income from securities and changes in value (17) -8,216 9,974

Interest expenses and similar expenses -410 -588

Financial income and expenses -7,793 10,524

Result before taxes -10,187 6,858

Taxes (18) - -

Result after taxes -10,187 6,858

Appropriation of the result 2018 2017

Addition to / withdrawal from:

- Continuity reserve - -

- Appropriated reserve -10,187 6,858

Total as at 31 December -10,187 6,858


4.3 CONSOLIDATED CASH FLOW STATEMENT FOR 2018(x EUR 1,000) 2018 2017

Balance of total income and expenses -2,394 -3,665

Adjustments for: Amortisation and depreciation 1,521 1,405

Changes in provisions -525 -1,445

Changes in operating capital

Changes in operating capital 657 -2,077

Unrealised changes in the value of securities 5,821 -5,083

6,478 -7,160

CASH FLOW FROM OPERATIONS 5,080 -10,866

Interest received 833 1,138

Purchases of securities -31,519 -86,126

Received repayments and/or proceeds from sale of securities 31,011 124,930

Interest paid -410 -588

Changes in copyright royalties to be distributed 2,641 2,663

Changes in forward exchange contracts 292 -

Non-current liabilities 319 2,325

3,167 44,342

CASH FLOW FROM INVESTMENT ACTIVITIES

Investments in intangible fixed assets -649 -665

Investments in tangible fixed assets -652 -2,257

Disposals of tangible fixed assets 27 -

CASH FLOW FROM INVESTMENT ACTIVITIES -1,274 -2,922

NET CASH FLOW 6,973 30,554

Change in cash and cash equivalents

Balance as at start of financial year 51,296 20,742

Investments during financial year 6,973 30,554

Balance as at 31 December 58,269 51,296

BUMA 37

4.4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

INFORMATION ABOUT THE LEGAL ENTITY

Business address and trade register numberVereniging Buma, having it registered office in Amstelveen and

its head office at Saturnusstraat 42-62, 7313 AB in Hoofddorp, is

registered with the Chamber of Commerce in Amsterdam under

file number 40530934.

GENERAL INFORMATION

Key activities of the legal entityThe objective of Vereniging Buma (hereinafter also ‘Buma’) is to

promote both the tangible and intangible interests of composers and

songwriters and their successors in title and of publishers and

publishing companies as a non-profit institution. By law, Buma has

been appointed by Royal Decree to represent the aforementioned

rights owners in a great number of administration areas. Buma

stands for Bureau Muziek Auteursrechten (Music Copyright Bureau).

Going concernThese financial statements have been prepared based on the going

concern assumption.

Period under reviewThese financial statements concern the financial year 2018, which

ended at the balance sheet date of 31 December 2018.

Comparative figuresIn order to provide better insight into the copyright royalties still to

be distributed, which was presented under ‘Royalties still in

progress’ in 2017, part of this item is presented under ‘Royalties

accrued in previous years’ in 2018 . This concerns copyright royalties

related to live performances which are not yet ready for distribution

because the necessary (processed) music use data is not yet

available. To facilitate the comparability of these figures, the

comparative figures for 2017 have been adjusted (reclassification of

EUR 9.5 million from ‘Royalties still in progress’ to ‘Royalties accrued

in previous years’).

Information about group structureBuma heads a group, of which Stichting Buma Beleggingsfonds (BBF)

is also a part. The consolidated financial statements of Buma include

the financial information of the following entities:

• Vereniging Buma

• Stichting Buma Beleggingsfonds

The company financial statements of these entities are included in a

separate report. For a proper understanding of the financial position

and result, these consolidated financial statements should be

viewed in conjunction with the company financial statements.

Pursuant to the Dutch Accounting Standards, the consolidated

financial statements include the financial information of Vereniging

Buma and of the related parties controlled by Buma as at 31

December. This financial information is accounted for according to

the full consolidation method on the basis of uniform accounting

policies. Adjustments are made in respect of differences

in accounting policies to bring the accounting policies in line with

those of the parent company. Therefore, 100% of the financial

information of the related parties is consolidated. The most

important intragroup supplies and services are eliminated from

both the turnover and from the other figures to be included in the

operating statement. The moment at which effective control is

acquired is also the moment at which a related party is included in

the consolidation. Consolidation continues until the moment when

effective control ceases.

Stichting Buma Beleggingsfonds is affiliated to the group in legal

terms and is controlled by the group. The operations of Stichting

Buma Beleggingsfonds mainly concern the implementation of

Buma’s investment policy.

Although Vereniging Buma and Stichting Stemra collaborate in one

staffing organisation, there is no intragroup relationship between

them, as they are not part of the same economic entity under the

relevant statutory provisions, because of the strict segregation

between Vereniging Buma and Stichting Stemra.

INFORMATION ABOUT ESTIMATES

In the preparation of the financial statements, the Board uses

estimates and assumptions when applying the accounting policies

and determining the reported amounts for assets, liabilities, income

and expenses. The estimates and underlying assumptions are based

on past experience and various other factors which are considered

to be reasonable given the circumstances, and which are assessed

periodically. Actual results may differ from these estimates.

Changes in estimates are recognised in the period affected by the

change.

In the view of the Board, the following changes in accounting

policies are the most critical to the presentation of the financial

position and require estimates and assumptions:

• Valuation of receivables;

• Actuarially determined provisions, such as the provision for the

annual allowances scheme of Stichting Sociaal Fonds Buma,

and the provision for long-service awards;

• Claims by licensees and/or rights owners related to the

collection and distribution of copyright royalties.

BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

Applied accounting standardsThe financial statements have been prepared in accordance with

Part 9 of Book 2 of the Netherlands Civil Code, as required by

Section 2q(3) of the Collective Management Organisations for

Copyright and Neighbouring Rights (Supervision and Dispute

Resolution) Act (‘Supervision Act’). In addition, the applicable

quality mark criteria of VOI©E (Association of Organisations that

Collectively Administer Intellectual Property) have been taken

into account.


Unless stated otherwise in the explanation of the accounting

policies, assets and liabilities are stated at historical cost.

An asset is recognised in the balance sheet when it is probable

that the future economic benefits will flow to the organisation and

the asset can be measured reliably.

A liability is recognised in the balance sheet when it is probable

that its settlement will result in an outflow of resources embodying

economic benefits and the amount at which the settlement will

take place can be measured reliably.

An asset or liability recognised in the balance sheet remains on the

balance sheet when a transaction (with respect to the asset or

liability) does not lead to a significant change in the economic

substance with respect to the asset or liability.

An asset or liability is no longer recognised in the balance sheet

when a transaction results in all or substantially all rights to

economic benefits and all or substantially all risks associated with

the asset or liability being transferred to a third party or being lost.

Income is recognised in the operating statement when an increase

in economic potential associated with an increase in an asset or a

decrease in a liability has arisen that can be measured reliably.

Expenses are recognised when a decrease in economic potential

related to a decrease in an asset or an increase in a liability has

arisen that can be measured reliably.

Income and expenses are allocated to the period to which they

relate. Revenue is recognised when the services provided in respect

of the copyright royalties can be determined reliably.

The functional currency of Vereniging Buma is the euro. Unless

stated otherwise, all amounts are rounded to thousands of euros.

Conversion of amounts in foreign currencyTransactions denominated in foreign currency are converted into

euros at the exchange rate prevailing at the transaction date.

Monetary assets and liabilities in foreign currency are converted

into euros on the balance sheet date at the exchange rate applica-

ble on this date. Exchange rate differences arising from the

settlement of monetary items, or arising from the conversion of

monetary items into foreign currency, are recognised in the

operating statement in the period in which they arise. Non-

monetary assets and liabilities in foreign currency that are

recognised at historical cost are converted into euros at the

exchange rate prevailing at the transaction date. The exchange rate

differences arising from the conversion are recognised in the

operating statement.

LeasesThe organisation can enter into financial and operational lease

contracts. A lease agreement where all or substantially all the risks

and rewards associated with the ownership of the leased asset are

transferred to the lessee qualifies as a financial lease. All other

lease agreements classify as operational leases. The classification

of a lease is determined based on the economic substance of the

transaction, not its legal form.

Operational leasesIf the organisation acts as the lessee in an operational lease, the

leased asset is not recognised. Fees received as an incentive to

conclude an agreement are recognised as a reduction in the lease

costs over the lease period. Lease payments and fees in respect of

operational leases are debited and credited respectively to the

operating statement using the straight-line method over the lease

period, unless a different allocation system is more representative of

the pattern of the benefits to be derived from the use of the leased

asset.

Pension plansVereniging Buma offers its employees a career average pension plan.

This pension plan is administered by Stichting Bedrijfstak pensioen-

fonds voor de Media, PNO (the industry-wide pension fund for the

media sector). The pension contributions payable for the financial

year are recognised as costs. A liability is recognised for unpaid

pension contributions as at balance sheet date. As the liabilities in

respect of the pension contributions have short terms, they are

stated at their nominal value. The risks in connection with wage

developments, price indexation and the investment returns on the

pension plan assets could lead to future adjustments in the annual

contributions to the pension fund. In the event of a shortfall at the

industry-wide pension fund, Vereniging Buma is not obliged to

pay additional contributions other than higher future pension

contributions.

Financial instrumentsFinancial instruments comprise both primary instruments

(receivables, securities, cash and cash equivalents and liabilities)

and derivative instruments (including forward exchange contracts).

Financial instruments are initially recognised at fair value, with the

directly attributable transaction costs being included in the initial

recognition. If, however, financial instruments are subsequently

recognised at fair value with changes in value being recognised in

the operating statement, the directly attributable transaction costs

are recognised directly in the operating statement upon initial

recognition.

After their initial recognition, financial instruments are

recognised as follows:

• Receivables are stated at amortised cost using the effective inter-

est rate method, less any provisions deemed necessary for the

risk of uncollectibility. These provisions are determined based

on individual assessments of the receivables.

• Securities (government bonds, bond funds, mortgage funds and

equity funds) constitute part of the investment portfolio and are

stated at fair value with changes in value being recognised in

the operating statement. The fair value is determined based on

the listed market price.

• Cash and cash equivalents are stated at nominal value. If cash

and cash equivalents are not at the free disposal of Buma, this is

taken into account in their valuation. Cash and cash equivalents

denominated in foreign currency are converted into the

functional currency at the balance sheet date at the exchange

rate applicable on that date. Please also refer to the pricing

principles for foreign currency transactions.

BUMA 39

• Liabilities are stated at amortised cost using the effective

interest rate method. The effective interest is recognised

directly in the operating statement. The repayment obligations

for the non-current liabilities in the year ahead are taken to

current liabilities.

• Derivative financial instruments (used for hedging the foreign

currency component of securities and for hedging foreign

currency liabilities) are stated at fair value, with changes in

value being recognised in the item ‘Changes in value’ in the


PRINCIPLES FOR THE VALUATION OF ASSETS AND LIABILITIES

Intangible fixed assetsIntangible fixed assets are stated at cost of acquisition or manufac-

ture less cumulative amortisation and impairment. Amortisation

charges are calculated as a percentage of the cost of acquisition or

manufacture using the straight-line method based on the estimat-

ed useful life. Advance payments on intangible fixed assets and

assets under construction are not amortised. Intangible fixed

assets are assessed at each balance date for indications that these

assets are subject to impairment. If such indications are present,

the recoverable amount of the asset is estimated. The recoverable

amount is the higher of the value in use and the net realisable

value. When the carrying amount of an asset is higher than the

recoverable amount, an impairment loss is recognised for the

difference between the carrying amount and the recoverable

amount. For impaired intangible fixed assets that have not yet been

taken into use, however, the recoverable amount is determined at

each balance sheet date.

The estimated useful life is as follows:

• business information system 3 - 8 years

Tangible fixed assetsTangible fixed assets are stated at cost of acquisition or manufac-

ture less cumulative depreciation and impairment. Deprecation

charges are calculated as a percentage of the cost of acquisition or

manufacture using the straight-line method based on the estimat-

ed useful life. Advance payments on tangible fixed assets and

assets under construction are not depreciated. Tangible fixed assets

are assessed at each balance date for indications that these assets

are subject to impairment. If such indications are present, the

recoverable amount of the asset is estimated. The recoverable

amount is the higher of the value in use and the net realisable

value. When the carrying amount of an asset is higher than the

recoverable amount, an impairment loss is recognised for the

difference between the carrying amount and the recoverable

amount.

The estimated useful life is as follows:

• hardware / computer equipment 3 - 5 years

• other operating assets 5 - 10 years

ReceivablesReceivables are initially recognised at fair value and subsequently

stated at amortised cost, less any provisions deemed necessary for

the risk of uncollectibility. These provisions are determined based on

individual assessments of the receivables.

SecuritiesListed shares and bonds are part of a trading portfolio and are stated

at their market value at the balance sheet date, with both unrealised

and realised changes in value being recognised directly in the


Cash and cash equivalentsCash and cash equivalents are stated at nominal value. If cash and

cash equivalents are not at the free disposal of Buma, this is taken

into account in their valuation.

Continuity reserveOne of the aims of the continuity reserve is to ensure the continuity

of the performance of the activities and the fulfilment of obligations

to third parties, also with regard to the distribution of copyright

royalties that still have to be distributed according to the financial

statements. In addition, this reserve serves to level out undesired

fluctuations in the amounts available for distribution.

Appropriated reserveThe aim of the appropriated reserve is to distribute the return on

investments to the rights owners in an orderly manner. To this end,

the income from and changes in value of securities recognised in

the operating statement are added to or withdrawn from the

appropriated reserve via the appropriation of the result. This is

based on the realised return, the expected return and advice

obtained from asset managers. The amount is deducted in the

operating statement from the administration fee charged to rights

owners, and withdrawn from the appropriated reserve via the

appropriation of the result to the extent that this reserve is

sufficient. Pursuant to Article 27, paragraph 6, of the Articles of

Association of Vereniging Buma, the financial statements are

adopted by the General Members’ Meeting. The Board proposes to

the General Members’ Meeting to withdraw the deficit from or to

add the surplus to the appropriated reserve. The appropriation of

the result is included in the financial statements.

ProvisionsA provision is recognised in the balance sheet for a legal or construc-

tive obligation arising from a past event, when it is probable that an

outflow of funds will be required for the settlement of this obliga-

tion, and the amount of the obligation can be estimated reliably.

Provisions are measured at the present value of the expenditure

expected to be required to settle the obligation.

Provision for annual allowances scheme of Stichting Sociaal Fonds BumaThe provision for the annual allowances scheme of Stichting Sociaal

Fonds Buma (SFB) concerns a provision for the annual allowances

paid to (former) composers and songwriters and publishers and


their legal heir through SFB. Although the obligations are

conditional, they are recognised as a constructive obligation

based on the agreements entered into and the raised expectations.

The provision has been charged to the Fund for Social and

Cultural Purposes. Therefore, any release of the provision will be

credited to the Fund for Social and Cultural Purposes. The

provision is recognised for the actuarial value of the commitments

that have been made. The expenses for the settlement of the

provision are incurred via Stichting Sociaal Fonds Buma.

Provision for long-service awardsThe provision for future long-service awards is the provision for

future long-service awards to active employees with a permanent

employment contract. The provision concerns the estimated

amount of the future long-service awards. The calculation is based

on the commitments made, employee retention rates and ages.

Non-current and current liabilitiesLiabilities are initially recognised at fair value and subsequently

stated at amortised cost.

Copyright royaltiesBuma recognises a receivable in respect of copyright royalties

when the amount can be determined reliably, it is probable that it

will flow to Buma, and it is enforceable as at balance sheet date.

Copyright royalties received from other, mainly international,

Collective Management Organisations (CMOs) are generally

recognised on a cash basis, as the amount cannot be determined

reliably at an earlier time. Copyright royalties are recognised in the

balance sheet in the item ‘Copyright royalties to be distributed’.

The Distribution Rules set out the rules for the distribution and

payment of music copyright royalties received by Buma to the

participants and other stakeholders. The Distribution Rules are

reviewed by the Board every three years.

As part of the distribution process, reserves are formed for, among

other things:

• works for which Buma has insufficient information to be able

to distribute royalties, for example because information on

rights owners, copyright details or cue sheets for films, series

or commercials is missing;

• works for which the cumulative revenue is lower than the

threshold for distribution (non-distributed items);

• claims in respect of comments with regard to the distribution

(also in view of the indemnification that Buma provides to the

paying licensee*). The reserve is based on historical data

regarding claims paid out per distribution section for

comments that were deemed to be justified, and amounts

to no more than 2%.

* In the agreements that Buma concludes with the licensee,

Buma indemnifies the licensee against claims of rights owners

affiliated directly or via sister societies. Furthermore, we refer to

Section 26 a-c of the Copyright Act, which sets out the provisions

for mandatory collective management.

Reserves are periodically reviewed and distributed when the

necessary information has been added or, in the case of a non-dis-

tributed item, when the threshold for distribution has been attained.

Reserves that have not been distributed within three calendar years

after the year of collection are distributed proportionally to the

various distribution sections via the general distribution in the

fourth calendar year after collection. For works that are claimed by

multiple rights owners (contradictory claims), no distribution takes

take place until it is clear who the rights owner is. A longer reserve

period may be used for royalties received from sister societies for

which insufficient information has been received to be able to

distribute them.

PRINCIPLES FOR DETERMINING THE RESULT

Administration feeThe administration fee is recognised as income in the operating

statement. For the greater part of the copyright royalties collected in

the financial year, the Distribution Rules permit fully offsetting the

income and expenses in the relevant financial year against the

copyright royalties. This offset administration fee is then recognised

in the year of collection as income in the operating statement under

‘Balance of administration fee to be withheld in the year of collec-

tion’. For a number of categories of copyright royalties (this mainly

concerns royalties received from abroad, cable fees paid to sister

societies abroad and the Online royalties), a fixed percentage of the

collected copyright royalties is withheld from the distribution to

rights owners as an administration fee. This administration fee is

recognised as income in the year of distribution under

‘Administration fee withheld upon distribution’.

TaxesTaxes comprise the current income tax payable or recoverable for

the reporting period. The taxes are recognised in the operating

statement. Current tax comprises the expected tax payable or

recoverable in respect of the taxable profit for the financial year,

calculated on the basis of tax rates enacted as at balance sheet date.

In an advance tax ruling valid until 31 December 2017, the Dutch Tax

and Customs Administration has determined that Vereniging Buma

is subject to corporation tax. Deductible foreign withholding taxes

and Dutch dividend tax may be deducted up to a maximum equal to

the amount of tax due under this advance tax ruling. Consequently,

no corporation tax is due for the financial year 2018.

Buma is in discussions with the Tax and Customs Administration

about the tax qualification of the entities.

Financial income and expensesDividends are recognised in the period in which they are declared.

Interest income and expenses from investments are recognised in

the period to which they relate. The costs of the investments are

recognised in the corresponding investment results. Transaction

results are recognised in the period in which the transaction took

place. Changes in the fair value of securities and derivative financial

instruments are recognised in the operating statement.

BUMA 41

Fair value measurementThe fair value of a financial instrument is the amount for which

an asset can be exchanged, or a liability settled, between

knowledgeable, willing parties in an arm’s-length transaction.

• The fair value of listed financial instruments is determined

based on the bid price.

The fair value of derivatives where no collateral is exchanged is

determined by discounting the cash flows based on the relevant

swap curve plus credit and

liquidity spreads.

PRINCIPLES FOR THE PREPARATION OF THE CASH FLOW STATEMENT

The cash flow statement has been prepared using the indirect

method. Cash flows denominated in foreign currency are converted

at an estimated average exchange rate. Exchange rate differences

related to cash balances are shown separately in the cash flow

statement. Purchases and sales of investments, interest and

dividends received, and interest and costs paid in connection with

investments qualify as cash flows from investment activities.

In the presentation of the cash flow statement, the copyright

royalties received on behalf of the rights owners and the

distributions made to rights owners are not recognised in the cash

flow statement. The cash flows associated with the copyright

royalties to be distributed by Buma are disclosed separately.


NOTES TO THE SPECIFIC ITEMS OF THE CONSOLIDATED BALANCE SHEET

(1) INTANGIBLE FIXED ASSETS

(x EUR 1,000)Business

information systemsAssets under construction Total

Balance as at 1 January 2018

Cost of acquisition/manufacture 9,696 792 10,488

Cumulative amortisation -6,551 - -6,551

Carrying amount as at 1 January 2018 3,145 792 3,937

Changes

Investments - 644 644

Amortisation -983 - -983

Disposals, cost of acquisition/manufacture -1,504 - -1,504

Disposals, cumulative amortisation 1,504 - 1,504

Total changes -983 644 -339

Balance as at 31 December 2018

Cost of acquisition/manufacture 8,192 1,436 9,628

Cumulative amortisation -6,030 - -6,030

Carrying amount as at 31 December 2018 2,162 1,436 3,598

The assets under construction relate to the development of the members’ portal and archiving. The investment in assets under construction concerns EUR 1.4

million in investments in 2018 and expenditure in the development phase totalling EUR -0.8 million charged to the operating result in 2018.

(2) TANGIBLE FIXED ASSETS

(x EUR 1,000)Hardware /

computer equipmentOther

operating assetsAssets under construction Total

Balance as at 1 January 2018

Cost of acquisition/manufacture 2,018 2,264 2,258 6,540

Cumulative depreciation -1,925 -2,212 - -4,137

Carrying amount as at 1 January 2018 93 52 2,258 2,403

Changes

Investments / first use 1,422 1,210 -1,971 661

Depreciation -386 -152 - -538

Disposals, cost of acquisition/manufacture -149 -2,102 - -2,251

Disposals, cumulative depreciation 146 2,078 - 2,224

Total changes 1,033 1,034 -1,971 96

Balance as at 31 December 2018

Cost of acquisition/manufacture 3,292 1,373 287 4,952

Cumulative depreciation -2,166 -287 - -2,453

Carrying amount as at 31 December 2018 1,126 1,086 287 2,499

The assets under construction relate to an investment in technical IT infrastructure.

BUMA 43

(5) PREPAYMENTS AND ACCRUED INCOME

(x EUR 1,000) 2018 2017

Interest receivable 129 165

Prepaid expenses 706 3,833

Other prepayments and accrued income 1,168 2,827

Total as at 31 December 2,003 6,825

The prepayments and accrued income have a term of less than one year.

(6) SECURITIES

(x EUR 1,000) 2018 2017

Fixed-income securities 120,987 124,424

Equity funds 40,670 42,841

161,657 167,265

The changes in the separate items are as follows:

(x EUR 1,000)Fixed-income

securities Equity funds Total

Balance as at 1 January 2018 124,424 42,841 167,265

Purchases 31,427 92 31,519

Repayments/sales -31,011 -31,011

Changes in value -3,853 -1,971 -5,824

Forward exchange contracts -292 -292

Total changes -3,437 -2,171 -5,608

Balance as at 31 December 2018 120,987 40,670 161,657

(4) OTHER RECEIVABLES

(x EUR 1,000) 2018 2017

Buma members and participants 951 959

Buma Cultuur current account 81 139

Other receivables 591 211

SCAN current account 46 -


The other receivables have a term of less than one year.

(3) ACCOUNTS RECEIVABLE

The accounts receivable balance as at year-end comprises amounts receivable that are collected directly by Buma and receivables for which the

collection is carried out by the Service Centre for Copyright and Neighbouring Rights (SCAN) and Ice Copyright Services AB (ICE).

The accounts receivable include an amount of EUR 1.1 million (2017: EUR 2.1 million) with a term of more than one year. All the other receivables

have an expected term of less than one year.

The carrying amount of the recognised receivables corresponds to their fair value, given the short-term nature of the receivables. Provisions for

uncollectible amounts have been recognised where necessary. The total provision for uncollectible amounts amounted to EUR 2.8 million as at

year-end 2018 (2017: EUR 2.4 million).


(7) CASH AND CASH EQUIVALENTS

(x EUR 1,000) 31/12/2018 31/12/2017

Cash - 1

Various banks 58,269 51,295


The cash and cash equivalents are at the free disposal of Buma, with the proviso that a bank guarantee of EUR 0.5 million (2017: EUR 0.5 million)

has been issued for the rent of the business premises. The cash and cash equivalents consist of cash held at Dutch system banks and securities

held by the custodian, who has an S&P A-2 rating for the short-term credit risk and an S&P BBB+ rating for the long-term credit risk.

LIABILITIES

(8) RESERVES

The changes in the reserves are as follows:

(x EUR 1,000) Continuity reserve Appropriated reserve Total

Balance as at 1 January 2018 1,855 23,617 25,472

Appropriation of result for previous financial year - -10,187 -10,187

Balance as at 31 December 2018 1,855 13,430 15,285

Of the income from securities, changes in value and similar income in 2018 totalling EUR -7.4 million (2017: EUR 11.1 million), EUR 2.8 million

(2017: EUR 4.3 million) has been offset against the administration fee charged on to the rights owners.

Pursuant to Article 27, paragraph 6, of the Articles of Association of Vereniging Buma, the financial statements are adopted by the General

Members’ Meeting. The Board has proposed to the General Members’ Meeting to withdraw the deficit of EUR 10.2 million from the appropriated

reserve. The appropriation of the result is included in the financial statements.

(9) PROVISIONS

(x EUR 1,000) 31/12/2018 31/12/2017

Annual allowances scheme of Stichting Sociaal Fonds Buma 7,184 7,776

Long-service awards 197 203

Other provisions 374 300

7,755 8,279

The fixed-income securities consist partly of government bonds held via a mandate holder and partly of funds for fixed-income securities.

The equity fund concerns a fund listed in euros, but which has underlying securities in different currencies. The currency risk on six large

positions in foreign currency is hedged by means of forward exchange contracts.

The purchases and sales of fixed-income securities concern the normal transactions in order to retain the maturity of the portfolio and the

periodic reweighting of the investment portfolio.

The securities are held either by our custodian, Kas Bank N.V., or by the custodian of the fund managers. As a strict segregation is maintained

between custody and management, the securities of Vereniging Buma will stay outside of any bankruptcy of third parties. The securities are at

the free disposal of Buma.

Buma did not convert any securities into cash in 2018.

BUMA 45

This provision concerns future long-service awards to employees and is largely long term. The provision for long-service awards includes an

amount of EUR 10 thousand (2017: EUR 7 thousand) with a term of less than one year.

In 2018, a provision was recognised for several legal claims for which a reliable estimate can be made of the financial consequences. In 2017, a

provision was recognised for expenditure expected to be incurred in 2018 in connection with the further investigation conducted by the CvTA in

response to the reports issued by BDO and Nauta Dutilh on 2016 and previous years.

LONG-SERVICE AWARDS

Changes in the provision for long-service awards are as follows:

(x EUR 1,000) 2018 2017

Balance as at 1 January 203 228

Interest payment 4 4

Withdrawal/addition 2 -14

Distributions -12 -15

Balance as at 31 December 197 203

OTHER PROVISIONS

(x EUR 1,000) 2018 2017

Balance as at 1 January 300 -

Addition 374 300

674 300

Withdrawal -300 -

Balance as at 31 December 374 300

Buma has made a conditional commitment to pay annual allowances to participants in the annual allowances scheme. This conditional

commitment is administered by Stichting Sociaal Fonds Buma. The purpose of this foundation is to continue unchanged the annual allowances

scheme for the payment of benefits to the group of recipients that existed on 1 July 1997.

Until now, the conditional annual allowances have been indexed annually based on Netherlands Statistics’ price index.

As at 31 December 2018, the provision for the annual allowances scheme was determined based on a discount rate of 1.65% (2017: 1.5%). As a

result, the interest payment increased compared to the previous year. As the actual mortality rate exceeded the rate to be expected based on the

actuarial mortality table, the provision was increased by EUR 81 thousand.

ANNUAL ALLOWANCES SCHEME OF STICHTING SOCIAAL FONDS BUMA

Changes in the provision for the annual allowances scheme of Stichting Sociaal Fonds Buma are as follows:

(x EUR 1,000) 2018 2017

Balance as at 1 January 7,776 9,497

Interest 121 135

Mortality result 81 -482

Indexation of annual allowances 126 116

Change in interest rate -68 -413

Change in life expectancy 53 -118

Distributions -905 -959



(10) NON-CURRENT LIABILITIES

(x EUR 1,000) 31/12/2018 31/12/2017

Pension liability 449 -

Fund for Social and Cultural Purposes 4,767 4,897

5,216 4,897

In addition to the pension obligation to the employees (with a term longer than one year), the non-current liabilities include the Fund for Social

and Cultural Purposes. The liabilities in respect of this fund are disclosed below.

Changes in the Fund for Social and Cultural Purposes are as follows:

(x EUR 1,000) 2018 2017


Addition from royalties to be distributed 10,456 9,896

Withdrawals -10,587 -9,704

Release of reserve for annual allowances - 2,133

Total changes -131 2,325


The withdrawals from the Fund for Social and Cultural Purposes in 2018 can be specified as follows:

(x EUR 1,000) 2018 2017

Social

Retirement provision for composers, songwriters and publishers for 2018 and 2017 4,807 4,835

Changes in retirement provision for composers, songwriters and music publishers until year-end 2017 -187 -510

Stichting Sociaal Fonds Buma commitments for 2019 and 2018 963 1,120

Stichting Sociaal Fonds Buma settlement relating to previous years -710 -1,809

Other 19 11

Withdrawals Social 4,892 3,647

Cultural

Stichting Buma Cultuur commitments for 2019 and 2018 3,983 3,997

Surcharge Serious 830 741

Stichting Brein 399 833

Professional associations 222 218

Other 261 268

Withdrawals Cultural 5,695 6,057

Total withdrawals 10,587 9,704

BUMA 47

The withdrawals from the Fund for Social and Cultural Purposes in 2018 can be specified as follows:

(x EUR 1,000) Social Cultural Total

Awarded and distributed in current financial year

Professional associations - 222 222

Other 19 252 271

Subtotal 19 474 493

Awarded for distribution in next financial year

Buma Cultuur - 3,983 3,983

Stichting Brein - 399 399

Sociaal Fonds Buma 963 - 963

Retirement provision (distribution calculated on income in financial year) 4,807 - 4,807

Surcharge Serious - 830 830

Subtotal 5,770 5,212 10,982

Settlement awarded for prior financial years

Stichting Sociaal Fonds Buma (settlement for operation) -192 - -192

Changes in provision for annual allowances for Stichting Sociaal Fonds -518 - -518

Changes in retirement provision -187 - -187

Other - 9 9

Subtotal -897 9 -888

Total withdrawal 4,892 5,695 10,587

Since 2009, the annual expenditure of the Fund for Social and Cultural Purposes has exceeded the annual contributions to the Fund. As a result,

the balance accrued until 2008 decreases annually.

The withholding from the amount of copyright royalties available for distribution for the Netherlands, and thus the addition to the fund, was set

by the Board at 8.0% for 2018 (2017: 8.0%).

Retirement provisions scheme Retirement provisions are funded through the Fund for Social and Cultural Purposes by making funds available for composers, songwriters and

music publishers who are affiliated to Buma and who meet certain conditions. These funds must be used by the composers, songwriters and

music publishers themselves for their own retirement provision. The basis for the funds made available for composers and songwriters

in 2018 is 10% (2017: 10%) of the copyright royalties received through Buma. The music publishers’ retirement provision amounts to 50% of the

maximum available amount for composers and songwriters. For both composers/songwriters and publishers, an annual income threshold of

EUR 1,120 (2017: EUR 1,104) applies.

In 2018, an amount of EUR 4.8 million was withdrawn from the Fund for Social and Cultural Purposes for retirement benefits for 2018, which will

be paid in 2019. This amount has been recognised as an obligation under the other liabilities.

Stichting Sociaal Fonds BumaThe recognised amount of EUR 963 thousand mainly concerns the commitment in respect of annual allowances for 2019 and other costs of

Stichting Sociaal Fonds Buma.

Stichting Buma CultuurStichting Buma Cultuur supports and promotes Dutch music copyright both in the Netherlands and in the most important export markets for

Dutch (not necessarily Dutch-language) music. The aim of Stichting Buma Cultuur is to contribute to defining and implementing Buma’s cultural

policy and creating and promoting musical works and related cultural expressions, in connection with Dutch music.

The amounts included for Stichting Buma Cultuur concern the grants that have been committed for 2019 of EUR 3,983 thousand (in 2017

EUR 3,997 thousand for the commitment for 2018).


Other The Surcharge Serious is a withdrawal from the Fund for Social and Cultural Purposes for the distribution to rights owners in the Serious Music

section. The Surcharge Serious was paid out in the first quarter of 2019. The item ‘other’ under cultural expenditure mainly concerns expenditure

in the context of the protection of copyright.

In 2017, it was agreed that VOI©E will collect the funds provided by the CMOs for the funding of Stichting Brein for a period of three years.

The withdrawal concerns a commitment for the year 2019.

(11) COPYRIGHT ROYALTIES TO BE DISTRIBUTED

(x EUR 1,000) 31/12/2018 31/12/2017

Accrued in financial year 141,405 137,026

Royalties still in progress 31,444 30,907

Accrued in previous years 19,162 21,438

192,011 189,371

Statement of changes in copyright royalties to be distributed

(x EUR 1,000) 2018 2017


Collection:

Music use in the Netherlands 164,471 157,688

CMOs Abroad 16,492 14,723

Revenue from copyright royalties 180,963 172,411

Distributions to:

Directly affiliated rights owners -87,262 -84,348

CMOs Abroad -57,855 -53,503

Distributions -145,117 -137,851

Administration fee withheld upon distribution -4,426 -3,589

Administration fee withheld in the year of collection -18,323 -18,411

Additions to Fund for Social and Cultural Purposes -10,456 -9,896

Withholdings -33,206 -31,897


On balance, the copyright royalties to be distributed increased by EUR 2.6 million compared to the previous year. The changes are

explained in more detail in the tables and texts below.

BUMA 49

The royalties to be distributed as at the balance sheet date can be

specified as follows:

(x EUR 1,000) 2018 2017

1. Accrued in financial year 141,405 137,026

2. Royalties still in progress due to:

- As yet unallocable royalties * 19,884 22,328

- Warsaw rule 2,055 1,660

- Cable fees from abroad 1,884 1,675

- Contradictory claims 6,924 4,829

- Other 697 414

Total royalties still in prog-ress 31,444 30,907

3. Accrued in prior financial years 19,162 21,438

Total 192,011 189,371

Royalties still in progress

Accrued in prior financial years

Accrued in financial year

74%

16%

10%

COMPOSITION OF COPYRIGHT ROYALTIES TO BE DISTRIBUTED

FOR 2018

* The comparative figures for 2017 have been adjusted to facilitate a uniform and comparable presentation. In 2017, the reserve for as yet unallocable royalties

also included the item ‘Live performances’ (see explanation of ‘Accrued in prior financial years’). In 2018, this item was recognised under ‘Accrued in prior

financial years’

The balance of the royalties to be distributed can be divided into three categories. These categories indicate in which phase of the

distribution process the royalties are.

The first category concerns the royalties accrued in the financial year. These royalties became available for distribution in the financial year,

and were partly already distributed in 2018. The largest part will be distributed as part of distribution of the general rights in 2019.

The second category concerns the royalties for which the distribution process could not be completed. Buma is committed to ensuring the

fair distribution of the collected royalties. The collected royalties must be allocated to the correct rights owners. Sometimes, it is not possible

yet to distribute royalties to the correct rights owners, for example because the registration of the copyrights is incomplete, or because there

is disagreement between the rights owners on the distribution of the copyright to their works.

The third category concerns royalties accrued in previous years that cannot yet be distributed to the correct rights owners.

The following sections provide further information on each category.


1. COPYRIGHT ROYALTIES ACCRUED IN FINANCIAL YEAR (EUR 141.4 MILLION)

These royalties were accrued in the financial year and became available for distribution in the financial year. This section explains the

composition of this category of royalties in more detail.

* This distribution partly consists of royalties accrued in previous years.

The withheld administration fee of EUR 18.3 million concerns the fee that Buma charges to rights owners for the services provided by

Buma for which no fixed administration fee has been determined.

The increase in the withheld administration fee is due to several elements. First of all, there was a downward adjustment of the standard

return on the investment portfolio (leading to a decrease in income by EUR 1.4 million). In addition, the distribution in respect of online

increased in 2018. For online, the administration fee is withheld at the time of distribution, which led to an increase in income by

EUR 0.8 million in 2018. In addition, the operational costs decreased by EUR 0.7 million.

Furthermore, a release from the copyright royalty reserves of EUR 1.3 million was added to the amount available for distribution in 2018

(2017: EUR 2.9 million); this concerns reserves for which the (statutory) reserve period has expired. The addition to the Fund for Social and

Cultural Purposes increased by EUR 0.6 million. The distributions in the financial year concern the distribution of royalties that were

collected in the financial year. This item also contains royalties that are not distributed by means of the general distribution method but

via 1-to-1 use, and which became available for distribution in 2018. Part of these royalties were accrued in 2018.

(x EUR 1,000) 2018 2017

Revenue from copyright royalties 180,963 172,411

Administration fee withheld in the year of collection -18,323 -18,411

Addition from release of copyright royalty reserves 1,268 2,868

Fund for Social and Cultural Purposes -10,456 -9,896

Subtotal of distribution of received copyright royalties 153,452 146,972

Distributed in financial year * -12,047 -9,946


The copyright royalties were received from the following categories:

(x EUR 1,000) 2018 2017

Radio, TV and Network Providers 71,430 68,177

Live performances 34,065 30,698

Restaurants and bars 14,891 14,294

Work spaces 17,171 17,392

Shops and stores 13,234 13,509

Online 13,681 13,618

Abroad 16,491 14,723

Total 180,963 172,411

BUMA 51

The copyright royalties received in 2018 are distributed as follows:

Distribution sections with administration fee to be withheld in year of collection

Copyright royalties

Administration fee withheld upon

collection

Gross amount available for distribution

8% withholding for Fund for Social

and Cultural Purposes

Addition from release of

copyright royalty reserves

Net amount available for distribution

(x EUR 1,000)

Serious Music sections 3,801 -467 3,334 -267 32 3,098

Live entertainment (excluding Mega Live Acts) 26,179 -3,219 22,960 -1,837 223 21,346

Mechanical entertainment 43,456 -5,343 38,113 -3,049 370 35,433

Radio 6,353 -781 5,572 -446 54 5,180

Television 46,215 -5,682 40,533 -3,243 393 37,683

Film 4,163 -512 3,651 -292 35 3,394

Cable 18,861 -2,319 16,542 -1,323 161 15,382

149,028 -18,323 130,705 -10,456 1,268 121,518

Distribution sections with administration fee to be withheld upon distribution

Copyright royalties

Gross amount available for distribution

Mega Live Acts 1,762 1,762 - - 1,762

Abroad 16,492 16,492 - - 16,492

Online 13,681 13,681 - - 13,681

31,935 31,935 - - 31,935

Total as at 31 December 180,963 -18,323 162,640 -10,456 1,268 153,453

2. ROYALTIES STILL IN PROGRESS (EUR 31.4 MILLION)

Royalties still in progress concern royalties for which the distribution process could not be completed yet. This section explains the

composition of this category of royalties in more detail.

There can be various reasons why royalties are included in the category ‘Royalties still in progress’. This is explained in the sections

below.

25,000

20,000

15,000

10,000

5,000

0AS YET UNALLOCABLE

ROYALTIES

19,884

WARSAW RULE

2,055

CABLE FEES FROM ABROAD

1,884

OTHER CONTRADICTORY CLAIMS

6,924

(x EUR 1,000)

697


As yet unallocable royalties (EUR 19.9 million)If data is missing or there is uncertainty about the received data, the use of music cannot be allocated to the correct rights owner. This item

also includes a reserve for possible subsequent claims. There can be three reasons why music use cannot be allocated to the correct rights

owner:

• No detailed data is available about broadcasts or this data is incomplete, which means there is no or only incomplete information

about the musical works used.

• No copyright data is available or this data has not yet been fully processed, which means that no active copyright is available that

can serve as a basis for the distribution. This data is submitted by the rights owner but is not always correct or complete.

• Assessment of royalties received from abroad. After receiving royalties and the associated use from the sister societies, Buma checks

the distribution of these royalties as specified by the sister society. Any anomalies must be examined. The royalties are distributed after

the necessary checks have been completed.

Warsaw rule (EUR 2.1 million)This concerns a reserve that is recognised if some of the rights owners are not fully identifiable. The unidentifiable portion is distributed or

reserved depending on the identifiable portion. This depends on the origin of the identified rights owners. If the majority of the known

rights owners are affiliates of Buma, the unidentified portion is reserved. If the majority of the known rights owners are affiliated with

another society, the amount is distributed to the relevant society. In this way, Buma also receives Warsaw amounts from other societies for

unknown rights owners.

Cable fees from abroad (EUR 1.9 million)This concerns amounts originating from other societies that relate to Dutch cable fees for which a distribution is made annually. The

accrued cable fees are paid out in the following year.

Contradictory claims (EUR 7.0 million)These amounts relate to copyrights for which the rights owners are still discussing how these rights should be distributed.

In order to provide better insight into the copyright royalties still to be distributed, which was presented under ‘Royalties still in progress’ in

2017, part of this item is presented under ‘Royalties accrued in previous years’ in 2018 . This concerns copyright royalties related to live

performances which are not yet ready for distribution because the necessary (processed) music use data is not yet available. To facilitate

the comparability of these figures, the comparative figures for 2017 have been adjusted (reclassification of EUR 9.5 million from ‘Royalties

still in progress’ to ‘Royalties accrued in previous years’).

3. ACCRUED IN PREVIOUS YEARS (EUR 19.2 MILLION)

In addition to the amounts accrued in the financial year and the royalties still in progress, there are also royalties that cannot be distributed

yet due to other reasons. The pie chart below show the distribution of these royalties.

COMPOSITION OF ROYALTIES ACCRUED IN PREVIOUS YEARS

Live performances

Unknown rights owners

Uncertain collection amounts

Accrued items16%

10%

60%

14%

BUMA 53

Live performances (EUR 11.6 million)To enable the proper distribution of royalties, not only the collection amounts but also the associated music use needs to be identified. The

royalties in respect of the music use need to be submitted by the events organisers and rights owners. Buma depends on these organisers

and rights owners. This information becomes available in stages. The royalties included in this item relate to music use for which the

required information has not yet become available.

‘Unknown rights owners’ and ‘Information still to be verified’ respectively (EUR 3.1 million)The royalties recognised under this item concern royalties for which the rights owners to which the royalties must be distributed have not

been identified yet, or for which the information submitted by the sister societies is still to be verified. When the rights owners can be

identified or the information submitted by sister societies can be processed, these royalties are paid out.

This item partly concerns royalties for which the manual verification process could not be completed in time. It is expected that the

processing of these royalties will be completed in 2019, after which they can be distributed.

Uncertain collection amounts (EUR 1.8 million)Regarding these amounts, there is uncertainty about the completeness of the collected amounts. As long as there is uncertainty about the

completeness of the collection, these royalties are not distributed.

Accrued items (EUR 2.7 million)This concerns royalties which became available for distribution late in 2018 and which could therefore not be processed in 2018. Most of

these royalties will be distributed in 2019.

4. AGE OF COPYRIGHT ROYALTIES TO BE DISTRIBUTED

AGE OF COPYRIGHT ROYALTIES TO BE DISTRIBUTED

2018

2017

2016

2015

Older

74%

6%

11%

4%5%

(x EUR 1,000) Total 2018 2017 2016 2015 Older

Accrued in financial year 141,405 141,405 - - - -

Royalties still in progress due to:

- As yet unallocable royalties 19,884 -924 10,684 6,562 3,562

- Warsaw rule 2,055 76 398 445 365 771

- Cable fees from abroad 1,884 1,848 7 29

- Contradictory claims 6,924 37 1,505 923 1,101 3,358

- Other 697 697

Accrued in prior financial years * 19,162 37 7,362 4,704 4,167 2,893

Total as at 31 December 192,011 141,327 21,797 12,640 9,225 7,022

* The amount in annual tranche 2018 was accrued in 2018. However, the reason why this amount has not yet been distributed relates to prior financial years.


(13) ACCRUALS AND DEFERRED INCOME

(x EUR 1,000) 31/12/2018 31/12/2017

Invoices to be paid 813 346

Amounts to be credited 34 418

Amounts invoiced in advance 797 564

Holiday allowance and annual leave 730 706

Rental payments in coming years 34 -

Other 546 341

2,954 2,375

The item ‘Amounts to be credited’ concerns the balance of royalties that still had to be paid to some parties as at year-end 2018. These

payments were made in the first quarter of 2019. No amounts with a term of more than one year were included under accruals and deferred

income as at 31 December 2018.

If royalties cannot be distributed upon the first attempt in the year of collection, they are taken to the item ‘Royalties still in progress.

For these royalties, Buma has, for a period of three years, the obligation to identify the rightful owner of these royalties and to distribute

them. If Buma is unable to do so, these royalties are added to the distribution of the general rights. An exception to this rule applies to

contradictory claims.

In addition to the contradictory claims reserve of EUR 3.4 million, the reserve for the collection for years prior to 2015 mainly consists of

royalties received from sister societies for which the information required for a correct distribution is not yet available.

The royalties accrued in previous years are expected to be distributed in 2019. This depends, however, on the timely submission of data by

third parties to Buma.

(12) OTHER LIABILITIES

(x EUR 1,000) 31/12/2018 31/12/2017

Obligations in respect of social and cultural purposes 11,367 11,120

Buma members and participants 901 735

Other 670 625

SCAN current account - 90

Stemra current account 1,742 695

14,680 13,265

The decrease in the obligations in respect of social and cultural purposes is broken down and explained in detail further on in this section.

The obligations in respect of social and cultural purposes are as follows:

(x EUR 1,000) 2018 2017

Grant obligations to Stichting Buma Cultuur for 2019 and 2018 4,233 4,100

Retirement provisions for composers, songwriters and music publishers 5,817 5,728

Surcharge Serious 840 714

Grant obligations to Stichting Brein for financial year 2019 399 417

Grant obligations to Stichting Sociaal Fonds Buma for financial years 2019 and 2018 78 161

13,267 22,604

BUMA 55

OTHER DISCLOSURES

RELATED PARTIES

The following parties are considered to be related parties of Vereniging Buma: Stichting Stemra, Stichting Buma Cultuur (and thus also Stichting

Amsterdam Dance Event), Stichting Sociaal Fonds Buma, Stichting Service Centrum Auteurs- en Naburige rechten (Service Centre for Copyright

and Neighbouring Rights) and the Management under the Articles of Association, Supervisory Board members and the Council of Rights

Owners and the Board of Vereniging Buma and Stichting Stemra. For more information on the remuneration of the Supervisory Board members,

the members of the Council of Rights Owners, the Board members and the Management under the Articles of Association, see the relevant

section. Normal transactions relating to the administration of copyrights involving Supervisory Board members or members of the Council of

Rights Owners, or involving related parties of Supervisory Board members or members of the Council of Rights Owners, are not explicitly

disclosed in the financial statements.

Any distributions of copyright royalties to Supervisory Board members and members of the Council of Rights Owners, or to related parties of

Supervisory Board members or members of the Council of Rights Owners, have been calculated in the same manner as the distributions to all

members and have been paid out in accordance with the normal procedures within Buma. Due to the close relationships within the sector,

Supervisory Board members and members of the Council of Rights Owners can also be related parties as customers of Buma, such as through a

music-related service that Buma uses. Transactions with these parties are carried out at arm’s length and under conditions that are no different

from the conditions that would have been agreed with other parties.

With a view to transparency, the copyright royalties distributed to members of the Supervisory Board and their companies must be disclosed

with effect from the financial year 2017. This concerns copyright royalties which Supervisory Board members have received as an individual or

through legal entities in which they have a majority interest. For reasons of privacy, only the categories into which the royalties received fall are

disclosed.

FINANCIAL INSTRUMENTSBuma’s most important financial instruments are securities (67% of the balance sheet total; 2017: 67%). Securities are used for the performance

of the investment policy, through which royalties that cannot yet be distributed to right owners are invested. Securities are stated at market

value. Buma’s investment policy is explained in more detail in the Board report. The interest rate risk on the fixed-income portfolio is

discounted in the stock market price of the bonds and bond funds. Investments in equity funds are not subject to a direct interest rate risk.

Buma runs a currency risk due to investments in an equity fund that is listed in euros, but which contains shares with a non-hedged listing in

foreign currency. In accordance with the investment policy, this currency risk has been hedged with forward exchange contracts for the most

important currencies, which are concluded periodically for the share of foreign currency in the equity fund. The key currencies are USD, GBP,

AUD, CAD, JPY and CHF. In the event that the euro becomes weaker or stronger in relation to the most important currencies as at 31 December

2018, this will lead to a higher or lower change in the value of the equity fund; however, due to the hedging of the currency risk, this will lead to

an approximately equal opposite change in the value of the concluded forward exchange contract. The credit risk is low given the allocation of

government bonds with a high rating and the solid rating of the other bond funds.

The other financial instruments included in the assets are receivables and cash and cash equivalents (30% of the balance sheet total; 2017: 31%),

which are valued at amortised cost and nominal value respectively. Receivables are generally non-interest-bearing. Given the current interest

rates, the interest payment on cash and cash equivalents is nil.

The maximum credit risk with regard to receivables and cash and cash equivalents equals the carrying amount. There is no concentration of

the credit risk. The financial liabilities represent 88% of the balance sheet total (2017: 85%). The main component of this are the copyright

royalties to be distributed, which account for 80% (2017: 75%). These are recognised at cost. The financial liabilities are non-interest-bearing. The

fair value of all the financial instruments approximates the carrying amount. There are no financial instruments with a carrying amount

exceeding the fair value.


THE COPYRIGHT ROYALTIES RECEIVED FALL INTO THE FOLLOWING CATEGORIES:

No distribution A

Between 0 and 15,000 B

Between 15,000 and 50,000 C

Between 50,000 and 100,000 D

Between 100,000 and 500,000 E

More than 500,000 F

The Supervisory Board members and the Board members have the following financial interests:

NAME POSITION BUMA

Ms Josephine de Zwaan Chairman of the Supervisory Board A

Mr Anthony Fiumara Member of the Supervisory Board B

Mr Ruud Hopstaken Member of the Supervisory Board A

Mr Rene Meister Member of the Supervisory Board B

Ms Jolanda Messerschmidt Member of the Supervisory Board A

Mr Arriën Molema Member of the Supervisory Board B

Mr Marc Swemle Member of the Supervisory Board E

Mr Raymond van Vliet Member of the Supervisory Board A

Mr Niels Walboomers Member of the Supervisory Board B

Mr Cees van Steijn Board member A

Mr Siebe van Elsloo Board member A

Mr Wim van Limpt Board member A

BUMA 57

OFF-BALANCE SHEET ASSETS AND LIABILITIES

GeneralVereniging Buma and Stichting Stemra work together in one staffing organisation under one Board, one Council of Members and one

Supervisory Board. Off-balance sheet assets and liabilities in connection with the outsourcing, coffee machines and planting have been entered

into by Buma and Stemra jointly and are recognised in full by both Vereniging Buma and Stichting Stemra. The allocation of costs between

Buma and Stemra for each liability is specified in the notes. The obligations regarding the rent and leasing have been entered into by Buma;

costs are charged on for this to Stemra. The amount of the charge-on is disclosed in the notes as an off-balance sheet asset.

Long-term liabilities

CHARGE-ONS TO RELATED PARTIES

For the achievement of their objectives, funds are made available to both Stichting Buma Cultuur and Stichting Sociaal Fonds Buma by the Fund

for Social and Cultural Purposes. For more information, see note (10). Vereniging Buma charges costs to Stichting Stemra, Stichting Buma

Cultuur, Stichting Sociaal Fonds and the Service Centre for personnel, accommodation and overheads. Charge-ons are based on cost. In

addition, the Service Centre charges on an amount of EUR 2.0 million (2017: EUR 1.8 million) to Buma for the performance of its tasks. The

Service Centre is responsible for part of the invoicing and collection on behalf of Buma and Stemra. The table below provides an overview of the

costs charged on by Buma.

The charged-on costs amount to:

(x EUR 1,000) 2018 2017

Stichting Stemra 2,000 2,839

Stichting Buma Cultuur 106 -

Stichting Sociaal Fonds Buma 49 69

Service Centre 340 375

Total 2,495 3,283

As at 31 December, the off-balance sheet liabilities had the following terms:

(x EUR 1,000) 2018 2017

Joint contracts with Stichting Stemra

Less than 1 year 1,617 1,399

Between 1 and 5 years 158 1,106

Longer than 5 years - -

1,775 2,505

Contracts entered into independently

Less than 1 year 565 573

Between 1 and 5 years 2,106 2,124

Longer than 5 years 2,254 2,777

4,925 5,474

Total 6,700 7,979

Leasing and softwareThe operational lease costs for printers, lease cars and software have been entered into by Buma and are allocated between Buma and Stemra

on the basis of 90%/10%. The costs are recognised over the lease period in the operating statement using the straight-line method. The liabilities

with a term of less than one year amount to EUR 0.2 million (2017: EUR 0.1 million) and the liabilities with a term of between one and five years

amount to EUR 0.1 million (2017: EUR 0.3 million).

RentThe financial obligation in respect of the accommodation in the previous premises in Hoofddorp ran until 31 December 2017. On 1 January 2018,

a new rental obligation was entered into for a period of ten years. The rental obligation has been entered into by Buma. The (annual) rental

obligation is allocated between Buma and Stemra on the basis of 90%/10%. The total rental obligation for the remaining term of the contract

amounts to EUR 4.7 million (2017: EUR 5.1 million).


Outsourcing of activities – ICE CopyrightVereniging Buma and Stichting Stemra have jointly entered into the obligation to outsource their musical works database to ICE for a period of

five years (as from March 2015). The remaining financial liability resulting from this amounts to EUR 0.7 million (2017: EUR 1.3 million).

The costs of ICE are allocated between Buma and Stemra on the basis of 90%/10%.

Outsourcing of activities – ICE OnlineVereniging Buma and Stichting Stemra have jointly entered into the obligation to outsource the processing of online music use to ICE for a

period of five years (as from March 2015). The remaining financial liability resulting from this amounts to EUR 0.2 million (2017: EUR 0.4 million.).

These costs are allocated between Buma and Stemra on the basis of 90%/10%.

AccentureVereniging Buma and Stichting Stemra have jointly entered into the contractual obligation to outsource part of the back-office activities to

Accenture until the end of December 2019. Part (the first quarter) of these liabilities has been prepaid and recognised in prepayments and

accrued income. The remainder represents a liability of EUR 0.7 million. A second part is a liability that is not included in the balance sheet.

This concerns improvement projects that Accenture performs annually. This liability concerns only the first quarter of 2019 and amounts to

EUR 0.2 million.

Long-term rightsAs at 31 December, the off-balance sheet rights had the following terms:

(x EUR 1,000) 2018 2017

Less than 1 year 56 345

Between 1 and 5 years 211 373

Longer than 5 years 225 278

Total 492 996

PNO Media (Pension deposit)Until 2018, Buma had a right to a deposit account at PNO Media, which was reported off-balance sheet. This right could be used to finance the

pension costs in excess of the cap of 15% of the integral wage bill, to the extent that the deposit at PNO media, which was earmarked for this

purpose, was sufficient to fund this. In 2018, it was agreed with PNO Media to transfer the remaining amount in the deposit account to Buma.

As this transfer was effected in 2018, PNO Media no longer has an obligation to Buma in respect of this deposit account, and Buma therefore no

longer has to report an off-balance sheet right.

Through the transfer of the deposit account and Buma’s receipt of the remaining amount from the deposit account, the obligation of PNO

Media to finance the pension costs in excess of the cap of 15% of the integral wage bill, to the extent that the deposit is sufficient to fund this,

has also been transferred to Buma. The relevant liability breaks downs into a current portion (financing of pension costs in excess of cap of 15%

of integral wage bill within one year) and a non-current portion (financing of pension costs in excess of cap of 15% of integral wage bill after

one year).

ClaimsA number of claims have been lodged against Vereniging Buma which it disputes, as well as a number of claims for which an outflow of funds is

expected. A provision has been recognised for the claims for which an outflow of cash is expected that can be estimated reliably. Although the

outcome of these disputes cannot be predicted with certainty, it is assumed – also based on legal advice – that these disputes will not have a

significant negative effect on the presented financial position of Buma.

Joint and several liabilityVereniging Buma is jointly and severally liable for the liabilities resulting from legal acts of the Service Centre for Copyright and Neighbouring

Rights (SCAN) and guarantees the fulfilment of the obligations of the Service Centre up to a maximum of EUR 1.0 million.

Subsequent eventsAll significant events that occurred after the balance sheet date, up to the date of preparation of these financial statements, have been

presented.

BUMA 59

NOTES TO THE OPERATING STATEMENT

(14) INCOME 2018 2017

Administration fee withheld upon distribution 4,426 3,589

Administration fee withheld in the year of collection 18,323 18,412

Contributions and registration fees 853 803

Other income 32 64

23,634 22,868

For information on the administration fee, please refer to section 1.2.3 of the Board report.

(15) PERSONNEL COSTS 2018 2017

Salaries 7,307 7,945

Social security contributions 1,140 1,188

Pension costs 1,015 630

Hiring of temporary personnel 1,135 933

Remuneration of the Board 269 284

Reimbursement of travelling expenses 342 451

Other personnel costs 1,708 495

12,916 11,926

Allocated to third parties -1,214 -1,144

11,702 10,782

In 2018, the personnel costs increased by EUR 0.9 million. This was mainly due to one-off costs related to (foreseen) severance packages

(increase of EUR 1.1 million), which were partly offset by a decrease in FTEs as a result of natural staff turnover (decrease of EUR 0.3 million)

and lower travelling expenses (decrease of EUR 0.1 million). The costs of hiring temporary external personnel increased slightly (increase of

EUR 0.2 million). Despite the increase in the personnel costs, the amount charged on to third parties (Stemra) remained stable.

As at 31 December 2018, the industry-wide pension fund (Stichting Bedrijfstakpensioenfonds voor de Media PNO) had a funding ratio of

106.0% (31 December 2017: 102.0%).

The average number of FTEs decreased in 2018 compared to 2017. During the financial year 2018, the average number of employees converted

into FTEs was 122.7 (2017: 141.3 FTEs). As shown in the table below, the workforce can be divided into the following personnel categories. This

includes employees who work partially for Stemra, by virtue of which part of the costs are charged on to Stemra.


COMPOSITION OF FTES 2018 2017

Board and secretariat 3.3 4.8

Secretariat of the Board 2.3 2.7

Legal Affairs & Lobbying 6.6 8.0

General Affairs 24.3 30.3

Front office 32.5 37.9

Back office 53.7 57.6

Total 122.7 141.3

REMUNERATION OF THE BOARD, COUNCIL OF MEMBERS, COUNCIL OF RIGHTS OWNERS AND MANAGEMENT UNDER THE ARTICLES OF

ASSOCIATION

Under the Supervision Act, which came into force on 1 July 2013, a number of paragraphs in the Public and Semi-Public Sector Senior Officials

(Standard Remuneration) Act (WNT) have been declared applicable to collective management organisations (CMOs). Vereniging Buma and

Stichting Stemra work together in one staffing organisation under one Board (and following the transition to the new supervision model also

one Supervisory Board), one Council of Members (and following the transition to the new supervision model also one Council of Rights Owners)

and one Management. The agreements with the Management, the Board, the Council of Members and the Council of Rights Owners have been

entered into by Vereniging Buma and Stichting Stemra jointly. The total remuneration of the senior officials of Vereniging Buma is specified in

the tables below in accordance with Section 4.1 of the WNT 2018, where relevant. However, 50% of the costs for the Board, the Council of

Members, the Council of Rights Owners and the Supervisory Board is recognised in the financial statements of Vereniging Buma and 50% in

those of Stichting Stemra. The remuneration of the Management is recognised in the financial statements of Vereniging Buma and Stichting

Stemra respectively on the basis of 90%/10%.

1. REMUNERATION OF SENIOR OFFICIALS

1A. SENIOR MANAGEMENT OFFICIALS WITH AN EMPLOYMENT CONTRACT, AS WELL THOSE WHO HAVE SERVED WITHOUT AN EMPLOYMENT

CONTRACT FOR 13 MONTHS OR MORE.

The remuneration per individual for 2018 – as defined in the Supervision Act – can be specified as follows (in EUR)*:

Name Position Employed

Total remuneration

plus taxable expense

allowance 2017

Post- contract benefits

Total WNT remuneration

2018

WNT maximum

2018


2017

WNT maximum

2017

Senior official with an employment contract

W.H.L van Limpt CEO** 1 Jan - 31 Dec

100% 174,445 14,552 188,997 189,000 181,000 181,000

* This concerns the total remuneration received from Buma/Stemra.** The employment contract was terminated as of 31 December 2018. Mr van Limpt served as CEO on a full-time basis throughout the year.


Name Position EmployedTotal WNT remuner-

ation 2018 WNT maximum 2018

Senior official without an employment contract

S.H. van Elsloo Acting CFO**

1 Nov - 31 Dec 100% 29,007 31,586

* This concerns the total remuneration received from Buma/Stemra; the Board member does not have an employment contract.** S.H. van Elsloo held the position of titular director / acting CFO until 28 October 2018 and was appointed as Board member / acting CFO with effect from 29

October 2018. He did not have an employment contract for the whole of 2018.

BUMA 61


Name Position Employed Remuneration 2018 Permitted maximum 2018 Remuneration 2017

Permitted maximum 2017

L.A.J.M. de Wit Chairman of the Board

1 Jan - 22 June 40%

23,891 35,832 46,378 72,400

H.O. Westbroek Board member 1 Jan - 22 June 20%

5,901 17,916 15,133 36,200

D. van Peursen Board member 1 Jan - 22 June 20%

5,901 17,916 11,816 36,200

A.D.G. Fiumara Board member 1 Jan - 22 June 20%

5,902 17,916 12,188 36,200

R. Meister Board member 1 Jan - 22 June 20%

5,902 17,916 12,188 36,200

A.B. Molema Vice-chairman of the Board **

1 Jan - 22 June 20%

8,530 17,916 14,618 36,200

P.L. Perquin Board member 1 Jan - 22 June 20%

5,902 17,916 12,188 36,200

A.A.L. de Raaff Board member 1 Jan - 22 June20%

5,901 17,916 12,188 36,200

M. Schimmer Board member 1 Jan - 22 June 20%

5,901 17,916 12,188 36,200

M. Swemle Board member 1 Jan - 22 June 20%

5,901 17,916 12,188 36,200

R. van Vliet Board member 1 Jan - 22 June 20%

5,901 17,916 12,188 36,200

J. van der Voet Board member 1 Jan - 22 June 20%

5,901 17,916 12,188 36,200

N.M. Walboomers Board member 1 Jan - 22 June 20%

5,893 17,916 12,188 36,200

* This concerns the total remuneration received from Buma/Stemra; these Board members do not have an employment contract.** This Board member is the Vice-chairman of the Board.

1B. SENIOR MANAGEMENT OFFICIALS WHO SERVED WITHOUT AN EMPLOYMENT CONTRACT IN THE CALENDAR MONTHS 1 UNTIL 12


Name Position Employed


2018

WNT maximum

2018


2017

WNT maximum

2017

Senior officials without an employment contract

C.J.J. van Steijn Acting CEO 29 Oct - 31 Dec 100%

55,328 75,900 - -

S.H. van Elsloo Acting CFO** 1 Jan - 31 Oct100%

183,665 215,800 17,440 49,000

* This concerns the total remuneration received from Buma/Stemra; these Board members do not have an employment contract.** S.H. van Elsloo held the position of titular director / acting CFO until 28 October 2018 and was appointed as Board member / acting CFO with effect from 29

October 2018. He did not have an employment contract for the whole of 2018.


1C. SENIOR SUPERVISORY OFFICIALS

REMUNERATION OF THE COUNCIL OF MEMBERS


Name Position Employed Remuneration 2018 WNT maximum 2018

Remuneration 2017 WNT maximum 2017

I.M. Chronis Chairman of the Council of Members

1 Jan - 22 June 3,935 13,437 8,079 27,150

W. Kwakman Vice-chairman and member of the Council of Members

1 Jan - 22 June 3,196 8,958 6,555 18,100

M.A. Bremer Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

J.M.F. Everling Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

M.T. Felis Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

T. Kalksma Member of the Council of Members

1 Jan - 22 June 2,442 8,958 5,078 18,100

K. Vergouwen Member of the Council of Members

1 Jan - 22 June 2,465 8,958 4,923 18,100

M. Krüs Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

B. van de Lisdonk Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

B.N.A.D. van der Poel Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

R. Zipora Member of the Council of Members

1 Jan - 22 June 2,459 8,958 5,078 18,100

E. Severs Member of the Council of Members

17 Jan - 22 June 2,230 8,130 - -

REMUNERATION OF THE COUNCIL OF RIGHTS OWNERS



I.M. Chronis Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

W. Kwakman Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

M.A. Bremer Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

J.M.F. Everling Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

D.D. van den Dungen Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

A. Romeijn Vice-chairman of the Council of Rights Owners

23 June - 31 Dec 3,493 9,942

M. Schimmer Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

M. Krüs Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

D. van Peursen** Chairman of the Council of Rights Owners

23 June - 31 Dec 3,841 12,091

K. Vergouwen Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

R. Zipora*** Chairman of the Council of Rights Owners

23 June - 31 Dec 3,651 12,919

J. van der Voet Member of the Council of Rights Owners

23 June - 31 Dec 2,687 9,942

* This concerns the total remuneration received from Buma/Stemra; these members of the Council of Members do not have an employment contract.** D. van Peursen served as Vice-Chairman from 23 June until 9 October 2018 and as Chairman from 11 October until 31 December 2018.*** R. Zipora served as Chairman of the Council of Rights Owners from 23 June until 15 October 2018. R. Zipora served as a member of the Council of Rights Owners

from 16 October until 31 December 2018.

* This concerns the total remuneration received from Buma/Stemra; these members of the Council of Members do not have an employment contract.

BUMA 63

REMUNERATION OF THE SUPERVISORY BOARD



J. de Zwaan Chairman of the Supervisory Board 22 May - 31 Dec 14,025 17,398

A. Fiumara Member of the Supervisory Board 23 June - 31 Dec 9,766 9,942

R. Meister Member of the Supervisory Board 23 June - 31 Dec 9,766 9,942

A.B. MolemaVice-chairman of the Supervisory Board 23 June - 31 Dec 9,766 9,942

M. Swemle Member of the Supervisory Board 23 June - 31 Dec 9,766 9,942

R. van Vliet Member of the Supervisory Board 23 June - 31 Dec 9,766 9,942

N.M. Walboomers Member of the Supervisory Board 23 June - 31 Dec 9,760 9,942

R.J.M. Hopstaken Member of the Supervisory Board** 29 Oct - 31 Dec 3,314 3,314

J. Messerschmidt Member of the Supervisory Board 29 Oct - 31 Dec 3,314 3,314

* This concerns the total remuneration received from Buma/Stemra; these members of the Supervisory Board do not have an employment contract.** R.J.M. Hopstaken served as an adviser from 1 July until 28 October; he served as a member from 29 October until 31 December.

3. OTHER REPORTING OBLIGATIONS UNDER THE WNT

3A. REMUNERATION OF NON-SENIOR OFFICIALS

In 2018, Buma made the transition from the previous governance model to a supervision model with a Board and a Supervisory Board. In this

new system, the titular directors have no responsibility for the (day-to-day) management of the entire organisation and no decision-making

powers in this respect, and this already applied in the lead up to the new system. This means the titular directors did not serve as senior

officials in 2018, and their remuneration is therefore disclosed under the category of non-senior officials. With regard to non-senior officials

whose remuneration exceeds the WNT maximum, Vereniging Buma and Stichting Stemra have the policy to scale this back in accordance with

the statutory transitional scheme until the WNT maximum is no longer exceeded.


Position Employed

Total remuneration plus taxable expense

allowance 2018

Post- contract benefits


2018

WNT maximum

2018


2017

WNT maximum

2017

Non-senior officials

Titular director 1 Jan - 31 Dec

100% 243,972 37,230 281,202 189,000 291,282 181,000

Titular director ** 1 Jan - 31 Dec

100% 195,471 28,348 223,820 189,000 221,458 181,000

* This concerns the total remuneration received from Buma/Stemra** Under the relevant contract, the titular director was entitled to a taxable travel expense allowance in connection with the return of a company lease car at the end

of 2017. This was included in a supplementary payment in 2018. As a result, the remuneration paid in 2017 was EUR 1,222 higher than the amount presented in the financial statements 2017.


OTHER EXPENSES (16) 2018 2017

Service agencies 3,882 3,737

Outsourcing 4,827 5,244

Advisory fees 955 2,797

Other IT costs 1,591 1,962

Lease & maintenance of IT equipment 1,243 896

Commercial expenses 192 380

Office supplies 132 233

Other expenses 735 857

13,557 16,106

Charged-on general costs -1,522 -2,545

12,035 13,561

In 2018, a reduction in the other expenses was achieved. This was mainly due to lower costs of outsourcing / service agencies as a result of cost

saving measures (decrease of EUR 0.3 million) and lower advisory fees (decrease of EUR 1.8 million). With regard to the advisory fees, it should

be noted that they were higher in 2017 due to one-off costs incurred for external audits. The IT project costs decreased by EUR 0.4 million in

2018 compared to 2017. In 2017, there was a one-off increase in IT project costs due to the relocation of the data centre. Due to the renting of

this data centre, the lease costs and maintenance costs for IT equipment increased by EUR 0.2 million in 2018. As a result of these

developments, the costs charged on to Stichting Stemra also decreased. There were no research and development costs.

(17) INCOME FROM SECURITIES AND CHANGES IN VALUE 2018 2017

€ €

Changes in the value of fixed-income securities -3,853 2,832

Changes in the value of equity funds -1,971 3,109

Costs and changes in the value of forward exchange contracts -2,392 4,033

-8,216 9,974

For more information on the development of the securities, please refer to the relevant section in the Board report.

(18) TAXES

The Dutch Tax and Customs Administration has determined in an advance tax ruling that runs until 31 December 2017 that Vereniging Buma is

subject to corporation tax. The advance tax ruling agreed with the Tax and Customs Administration dates from 6 November 2001 and was

extended in May 2012 for a period of five years until 31 December 2016 and, in November 2016, extended for a period of one year until

31 December 2017. It was subsequently extended until December 2018.

Buma is in discussions with the Tax and Customs Administration about the tax qualification of the entities.

BUMA 65

SignatureHoofddorp, 23 May 2019

SUPERVISORY BOARD

Ms Josephine de Zwaan Chairman

Mr Anthony Fiumara Member of the Supervisory Board

Mr Ruud Hopstaken Member of the Supervisory Board

Ms Jolanda Messerschmidt Member of the Supervisory Board

Mr Rene Meister Member of the Supervisory Board

Mr Arriën Molema Member of the Supervisory Board

Mr Marc Swemle Member of the Supervisory Board

Mr Raymond van Vliet Member of the Supervisory Board

Mr Niels Walboomers Member of the Supervisory Board

BOARD

Mr Siebe van Elsloo Acting Chief Financial Officer

Mr Cees van Steijn Acting Chief Executive Officer


5. OTHER INFORMATION

BUMA 67

INDEPENDENT AUDITOR’S REPORT

To the General Assembly of Vereniging Buma

REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS 2018INCLUDED IN THE ANNUAL REPORT

OUR OPINIONWe have audited the consolidated financial statements 2018 of

Vereniging Buma, based in Amstelveen.

In our opinion the accompanying consolidated financial statements

give a true and fair view of the financial position of Vereniging

Buma as at 31 December 2018, and of its result for 2018 in

accordance with Part 9 of Book 2 of the Dutch Civil Code and section

25a of the Collective Management Organisations for Copyright and

Related Rights (Supervision and Disputes Settlement) Act (hereafter:

‘Supervision Act’).

The consolidated financial statements comprise:

1. the consolidated balance sheet as at 31 December 2018;

2. the consolidated operating statement for 2018; and

3. the notes comprising a summary of the accounting policies and

other explanatory information.

BASIS FOR OUR OPINIONWe conducted our audit in accordance with Dutch law, including

the Dutch Standards on Auditing and the Supervision Act. Our

responsibilities under those standards are further described in the

‘Our responsibilities for the audit of the consolidated financial

statements’ section of our report.

We are independent of Vereniging Buma in accordance with the

Verordening inzake de onafhankelijkheid van accountants bij

assurance-opdrachten (ViO, Code of Ethics for Professional

Accountants, a regulation with respect to independence) and other

relevant independence regulations in the Netherlands. Furthermore

we have complied with the Verordening gedrags- en beroepsregels

accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

CONSOLIDATED FINANCIAL STATEMENTS AS PART OF THE (COMPLETE) FINANCIAL STATEMENTSThe financial statements include the consolidated financial

statements and the association’s financial statements. The

association’s financial statements have been included in a separate

report. For a proper understanding of the financial position and

result the consolidated financial statements must be considered in

connection with the association’s financial statements. On 23 May

2019 we issued a separate auditor’s report on the association’s

financial statements.

COMPLIANCE WITH ANTI-CUMULATION PROVISION OF WNT HAS NOT BEEN AUDITEDWith regard to the provisions in Section 25a of the Supervision

Act, our audit did not include a review of whether any senior

management official exceeded remuneration standards due to

being employed at another institution which is subject to the

Standards for Remuneration Act (WNT), nor did we review the

accuracy and completeness of the disclosures required in this

respect.

REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORTIn addition to the consolidated financial statements and our

auditor’s report thereon, the annual report contains other

information that consists of:

• key figures Buma;

• Board report;

• supervisory Board report;

• approval on the consolidated financial statements;

• other information.

Based on the following procedures performed, we conclude that the

other information:

• is consistent with the consolidated financial statements and

does not contain material misstatements;

• contains all the information required pursuant to Part 9 of Book

2 of the Netherlands Civil Code;

• contains the information as required by sections 2b through

to 3.d.4 of the ‘Besluit transparantieverslag richtlijn collectief

beheer’.

We have read the other information. Based on our knowledge and

understanding obtained through our audit of the financial

statements or otherwise, we have considered whether the other

information contains material misstatements.

By performing these procedures, we comply with the requirements

of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard

720. The scope of the procedures performed is substantially less

than the scope of those performed in our audit of the consolidated

financial statements.

The board is responsible for the preparation of the other

information, including the board report and supervisory board

report, in accordance with Part 9 of Book 2 of the Dutch Civil Code,

sections 2b through to till 3.d.4 of the ‘Besluit transparantieverslag

richtlijn collectief beheer’ and other information as required by Part

9 of Book 2 of the Dutch Civil Code.


DESCRIPTION OF RESPONSIBILITIES REGARDNG THE CONSOLIDATED FINANCIAL STATEMENTS

RESPONSIBILITIES OF THE BOARD AND THE SUPERVISPORY BOARD FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The board is responsible for the preparation and fair presentation of

the consolidated financial statements in accordance with Part 9 of

Book 2 of the Dutch Civil Code and the Supervision Act. Furthermore,

the board is responsible for such internal control as the board

determines is necessary to enable the preparation of the consolidated

financial statements that are free from material misstatement,

whether due to fraud or error.

As part of the preparation of the consolidated financial statements, the

board is responsible for assessing the association’s ability to continue

as a going concern. Based on the financial reporting framework

mentioned, the board should prepare the consolidated financial

statements using the going concern basis of accounting unless the

board either intends to liquidate the association or to cease operations,

or has no realistic alternative but to do so.

The board should disclose events and circumstances that may cast

significant doubt on the association’s ability to continue as a going

concern in the consolidated financial statements.

The supervisory board is responsible for overseeing the company’s

financial reporting process.

OUR RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTSOur objective is to plan and perform the audit engagement in a

manner that allows us to obtain sufficient and appropriate audit

evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of

assurance, which means we may not detect all material errors and

fraud during our audit.

Misstatements can arise from fraud or error and are considered

material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the

basis of these consolidated financial statements. The materiality

affects the nature, timing and extent of our audit procedures and the

evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgement and have maintained

professional scepticism throughout the audit, in accordance with

Dutch Standards on Auditing, ethical requirements and independence

requirements. Our audit included among others:

• identifying and assessing the risks of material misstatement of the

consolidated financial statements, whether due to fraud or error,

designing and performing audit procedures responsive to those

risks, and obtaining audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher

than for one resulting from error, as fraud may involve collusion,

forgery, intentional omissions, misrepresentations, or the override

of internal control;

• obtaining an understanding of internal control relevant to the

audit in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the association’s internal control;

• evaluating the appropriateness of accounting policies used and

the reasonableness of accounting estimates and related

disclosures made by the board;

• concluding on the appropriateness of the board’s use of the going

concern basis of accounting, and based on the audit evidence

obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the association’s

ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in

our auditor’s report to the related disclosures in the consolidated

financial statements or, if such disclosures are inadequate, to

modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s report. However,

future events or conditions may cause an organization to cease to

continue as a going concern;

• evaluating the overall presentation, structure and content of the

consolidated financial statements, including the disclosures; and

• evaluating whether the consolidated financial statements

represent the underlying transactions and events in a manner

that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also

responsible for directing, supervising and performing the group audit.

In this respect we have determined the nature and extent of the audit

procedures to be carried out for group entities. Decisive were the size

and/or the risk profile of the group entities or operations. On this

basis, we selected group entities for which an audit or review had to

be carried out on the complete set of financial information or specific

items

We communicate with the supervisory board regarding, among other

matters, the planned scope and timing of the audit and significant

audit findings, including any significant findings in internal control

that we identify during our audit.

We provide the supervisory board with a statement that we have

complied with relevant ethical requirements regarding independence,

and to communicate with them all relationships and other matters

that may reasonably be thought to bear on our independence, and

where applicable, related safeguards

Amsterdam, 23 May 2019

Mazars N.V.

M.G.W. Quaedvlieg RA AA MBA MSc

BUMA 69

PUBLICATION

ADDRESS

HEAD OFFICE

SATURNUSSTRAAT 46-62

2132 HB HOOFDDORP

T: 023 799 79 99

[email protected]

WWW.BUMASTEMRA.NL

EDITORIAL BOARD

VERENIGING BUMA

DRAFT, DESIGN & REALISATION

MERKELIJKHEID


BUMA 71


Documents

ANNUAL REPORT VERENIGING BUMA 2018...(CvTA); • deciding to make the recommendation to the General Members’ Meeting to appoint the Chief Executive as the Chairman of the Board (for